July 2015 IPO Market Review

July 2015 IPO Market Review

Blog The Road to IPO: Legal and Regulatory Insights into Going Public

The IPO market produced 15 IPOs in July with gross proceeds of $2.74 billion.

July’s tally brings the total number of IPOs over the first seven months of 2015 to 106, the fourth highest total for the first seven months of the year since 2000.

Gross proceeds over the first seven months of 2015 climbed to $16.15 billion, 63% less than the $35.61 billion in gross proceeds raised over the first seven months of 2014. The year-to-date total for gross proceeds is the fourth lowest annual tally through July over the past twenty years, besting only 2003, 2009 and 2010.

The first seven months of 2014 produced six billion-dollar IPOs with an additional dozen raising more than $500 million. The first seven months of 2015 have yet to produce a billion-dollar IPO and have seen only six IPOs over $500 million, five of which have come over the last two months.

Despite the absence of very large deals year-to-date, the median IPO offering size edged up by less than 1%, from $96.0 million in 2014 to $96.5 million over the first seven months of 2015.

The median life sciences IPO offering size over the first seven months of 2015 was $75.0 million, compared to $110.2 million for all other companies.

Emerging growth companies (EGCs) have accounted for all but seven IPOs over the first half of 2015, or 93% of the total, compared to 85% of all IPOs in 2014. The median EGC IPO offering size over the first seven months of 2015 was $88.2 million, one-fifth of the $441.0 million median offering size for non-EGC IPO companies.

The median annual revenue for IPO companies fell by 39% from $68.2 million in 2014 to $41.3 million over the first seven months of 2015—the lowest annual figure since the $17.6 million median in 2000.

Fewer than half of the life sciences IPO companies over the first seven months of 2015 were generating any revenue, compared to a median annual revenue of $106.5 million for all other IPO companies.

The average IPO over the first seven months of 2015 produced a first-day gain of 18%, with one quarter of the IPOs “broken” (IPOs whose stock closes below the offering price on their first day). In comparison, the average 2014 IPO produced a 14% first-day gain, with 27% of all 2014 IPO broken.

At July month-end, the average 2015 IPO was trading up 17% from its offering price, a decline of 1% from its first day closing price. Aftermarket performance is mixed with 48% of all 2015 IPOs trading at least 20% above their offering price at July 31, 36% trading below their offering price and 48% trading below their first-day closing price.

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

  • Natera, a rapidly growing diagnostics company with proprietary molecular and bioinformatics technology that the company is deploying to change the management of genetic disease worldwide, priced an IPO upsized by 60% at the high end of an upwardly revised price range and produced a first-day gain of 26%.
  • Chiasma, a late-stage biopharmaceutical company focused on improving the lives of patients suffering from orphan diseases by developing and commercializing novel oral forms of therapies that are available today only by injection, priced an IPO upsized by 19% above the range and ended its first day of trading up 25% from its offering price.
  • Jupai Holdings, a leading third-party wealth management service provider focusing on distributing wealth management products and providing quality product advisory services to high-net-worth individuals in China, priced an IPO downsized by 10% at the low end of the range and gained 11% in first-day trading.
  • Ollie's Bargain Outlet Holdings, a highly differentiated and fast-growing, extreme value retailer of brand name merchandise at drastically reduced prices, priced above the range and produced a first-day gain of 32%.
  • ProNAi Therapeutics, a clinical-stage oncology company pioneering a novel class of therapeutics based on its proprietary DNA interference technology platform, priced above the range and climbed 81% from its offering price in first-day trading.
  • MCBC Holdings, a world-renowned innovator, designer, manufacturer and marketer of premium performance sport boats, with a leading market position in the United States, a strong international presence and dealers in 40 countries around the world, priced at the high end of the range and ended its first day of trading with a 6% gain.
  • Ooma, a leading provider of innovative communications solutions and other connected services to small business, home and mobile users, priced below the range and ended its first day of trading down 16% from its offering price.
  • Rapid7, a leading provider of security data and analytics solutions that enable organizations to implement an active, analytics-driven approach to cyber security, priced above the range and produced a first-day gain of 58%.
  • Blue Buffalo Pet Products, the fastest growing major pet food company in the United States, selling dog and cat food made with whole meats, fruits and vegetables, and other high-quality, natural ingredients, priced an IPO upsized by 15% above the range and gained 36% in first-day trading.
  • Neos Therapeutics, a pharmaceutical company focused on developing, manufacturing and commercializing products utilizing its proprietary modified-release drug delivery technology platform, which the company has already used to develop its three branded product candidates for the treatment of attention deficit hyperactivity disorder, priced an IPO upsized by 20% at the midpoint of the range and produced a first-day gain of 30%.
  • Live Oak Bancshares, an established national online platform for small business lending, priced an IPO upsized by 20% at the midpoint of the range and ended its first day of trading up 12% from its offering price.
  • NantKwest, a pioneering clinical-stage immunotherapy company focused on harnessing the power of the innate immune system by using the natural killer cell to treat cancer, infectious diseases and inflammatory diseases, priced an IPO upsized by 18% above the range and gained 39% in first-day trading.
  • vTv Therapeutics, a clinical-stage biopharmaceutical company engaged in the discovery and development of orally administered small molecule drug candidates to fill significant unmet medical needs, priced at the low end of the range and ended its first day of trading down 27% from its offering price.
  • Aqua Metals, a company engaged in the business of recycling lead through a novel, proprietary and patent-pending process, priced at the expected price and produced a first day gain of 7%.
  • TerraForm Global, a high-growth, globally diversified renewable energy company that owns long-term contracted wind, solar and hydro-electric power plants, priced below the range and declined 7% from its offering price in first-day trading.

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