July 2016 IPO Market Review

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August 5, 2016

The IPO market produced 10 IPOs in July, bringing the total number of IPOs over the first seven months of the year to 47–56% below the 106 IPOs over the first seven months of 2015.

Gross proceeds in July were $2.69 billion, the third highest monthly figure over the last twelve months. For the first seven months of 2016, total proceeds are $8.73 billion, or 46% below the $16.15 billion raised over the first seven months of 2015.

The life sciences sector continued to dominate the IPO market in July, accounting for four of the month’s new offerings. Over the first seven months of the year, life sciences companies have produced 24 IPOs, or 51% of the year’s total, up from 47% in 2015 and 40% in 2014.

IPOs by emerging growth companies (EGCs) have accounted for 79% of the year’s IPOs, down from 93% of the total in 2015 and 85% of all IPOs in 2014.

The median IPO offering size over the first seven months of 2016 was $91.0 million, just shy of the $91.7 million for all IPOs in 2015, and 9% below the $101.0 million figure for the five-year period preceding 2015.

The median annual revenue of IPO companies through the first seven months of 2016 was $62.9 million, two-thirds above the $37.8 million median figure for 2015, but almost one-third below the $92.7 million median figure for the five-year period from 2010 to 2014.

Six of the companies that went public in July were profitable, only the third month since the start of 2014 in which a majority of IPO companies were profitable. Over the first seven months of 2016, 38% of IPO companies have been profitable, compared to 30% in 2015 and 36% in 2014, but well below the 54% that prevailed over the five-year period preceding 2014.

Year to date, the average IPO has produced a first-day gain of 10%, compared to average first day gains of 16% in 2015 and 14% in 2014. The average 2016 life sciences IPO company gained 5% in first-day trading, compared to 15% for all other 2016 IPO companies.

In the first seven months of 2016, 26% of IPOs have been “broken” (IPOs whose stock closes below the offering price on their first day). An equal percentage of IPOs was broken in 2015, down 1% from the 27% of broken IPOs in 2014.

At July month-end, the average IPO company was trading 19% above its offering price, 26% of companies were trading below their offering price and 43% were trading below their first-day closing price. Through July, the average 2016 life sciences IPO company was trading 4% above its offering price, while the average non-life sciences IPO company added to its first-day gain to end the month 34% above its offering price.

IPO activity in July consisted of offerings by the following companies listed in the order they came to market:

  • LINE Corporation, a leading global platform for mobile messaging and communication services, content distribution and advertising, priced above the range and produced a first-day gain of 28%.
  • AdvancePierre Foods Holdings, a leading national producer and distributor of value added, convenient, ready-to-eat sandwiches, sandwich components and other entrées and snacks, priced near the low end of the range and ended its first day of trading with a gain of 14%.
  • Audentes Therapeutics, a biotechnology company focused on developing and commercializing gene therapy products for patients suffering from serious, life-threatening rare diseases caused by single gene defects, priced at the midpoint of the range and gained less than 1% in first-day trading.
  • Impinj, a provider of a platform that enables wireless connectivity to billions of everyday items such as apparel, race bibs, golf balls and luggage tags and delivers each item’s unique identity, location and authenticity to enterprise and consumer applications, priced an upsized IPO at the high end of the range and ended its first trading day up 28% from its offering price.
  • Patheon, a leading global provider of outsourced pharmaceutical development and manufacturing services, priced within the range and gained 19% in first-day trading.
  • TPI Composites, the largest US-based independent manufacturer of composite wind blades, priced at the low end of a downwardly revised range and produced a first day gain of 23%.
  • Kadmon Holdings, a fully integrated biopharmaceutical company engaged in the discovery, development and commercialization of small molecules and biologics to address disease areas of significant unmet medical need, priced at the low end of the range and ended its first day of trading down 19% from its offering price.
  • Kinsale Capital Group, an established and growing specialty insurance company, priced at the high end of the range and ended up 15% from its offering price in first-day trading.
  • Tactile Systems Technology, a medical technology company that develops and provides innovative medical devices for the treatment of chronic diseases at home, priced at the expected price and produced a first-day gain of 11%.
  • Talend, a provider of a software platform that integrates data and applications in real time across modern big data and cloud environments, as well as traditional systems, allowing organizations to develop a unified view of their business and customers across organizational and technology silos, priced above the range and ended its first trading day up 42%.
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Topic:News