The IPO market produced 20 IPOs in the first quarter of 2017, an increase from the eight during the first quarter of 2016 but well below the first quarter average of 35 IPOs over the five-year period of 2011 through 2015.
Gross proceeds in the first quarter of 2017 were $8.09 billion, a figure buoyed by the $3.4 billion IPO from Snap—the largest US IPO since Alibaba’s record-breaking $21.8 billion IPO in September 2014.
Year-to-date, IPOs by emerging growth companies (EGCs) have accounted for three-quarters of all IPOs, down from 84% in 2016 and 93% in 2015. Since enactment of the JOBS Act in 2012, 85% of all IPOs have been by EGCs.
Life sciences companies accounted for four IPOs, or 20% of the quarter’s total, compared to 41% in 2016 and 47% in 2015.
The median offering size for all IPOs in the first quarter of 2017 was $227.2 million—more than double the annual figure for any of the preceding five years. The 2017 increase was driven largely by a higher proportion of private equity–backed IPOs. PE-backed IPO accounted for half of all first quarter 2017 IPOs, compared to 24% of all IPOs over the five-year period preceding 2017. The median offering size for life sciences company IPOs was $85.9 million, equal to one-third of the $263.8 million figure for non–life sciences companies.
Year-to-date, the median offering size for IPOs by EGCs was $179.2 million, compared to $307.8 million for IPOs by non-EGCs. From 2012 to 2016, the median EGC IPO offering size was $85.9 million, compared to $421.1 million for non-EGC IPOs.
The median annual revenue of IPO companies in the first quarter of 2017 was $295.2 million—more than four times the $66.5 million figure for 2016. EGC IPO companies in the first quarter of 2017 had median annual revenue of $180.8 million, compared to $39.2 million in 2016. The median annual revenue for non-EGC IPO companies more than doubled from $1.54 billion in 2016 to $3.38 billion in the first quarter of 2017. None of the life sciences IPO companies in the first quarter of 2017 was generating revenue.
Only one-quarter of IPO companies in the first quarter of 2017 were profitable, compared to 36% in 2016. Among EGC IPO companies in the first quarter of 2017, only 20% were profitable, compared to 34% from 2012 to 2016.
In the first quarter of 2017, the average IPO produced a first-day gain of 9%, compared to 12% in 2016 and lower than the annual figure for each year since 2009. Year to date, the average life sciences IPO company declined 4% in first-day trading, compared to a 13% gain for all other IPO companies. Over the first quarter of 2017, 25% of IPOs were “broken” (IPOs whose stock closes below the offering price on their first day), compared to 24% in 2016 and 26% in 2015.
At March 31, the average 2017 IPO company was trading 13% above its offering price, with 30% trading below their offering price and 35% trading at least 25% above their offering price. The average 2017 life sciences company ended the quarter up 23% from its offering price, while the average non–life sciences IPO company ended the quarter 11% above its offering price.
IPO activity in the first quarter of 2017 consisted of offerings by the following companies listed in the order they came to market:
- Keane Group, one of the largest pure-play providers of integrated well completion services in the U.S., with a focus on complex, technically demanding completion solutions, priced a twice-upsized IPO at the high end of the range and produced a first‑day gain of 14%.
- AnaptysBio, a clinical-stage biotechnology company developing first-in-class antibody product candidates focused on unmet medical needs in inflammation, priced an upsized IPO at the midpoint of the range and gained 13% on its first day of trading.
- ObsEva, a clinical-stage biopharmaceutical company focused on the development and commercialization of novel therapeutics for serious conditions that compromise a woman’s reproductive health and pregnancy, priced at the midpoint of the range and ended its first trading day down 22% from its offering price.
- Jagged Peak Energy, a growth-oriented, independent oil and natural gas company focused on the acquisition and development of unconventional oil and associated liquids‑rich natural gas reserves in the Southern Delaware Basin, a sub-basin of the Permian Basin of West Texas and one of the most prolific unconventional resource plays in North America, priced below the range and declined 4% in first-day trading.
- JELD-WEN Holding, one of the world’s largest door and window manufacturers, holding the #1 position by net revenues in the majority of the countries and markets it serves, priced at the high end of the range and ended its first day of trading up 14% from its offering price.
- Jounce Therapeutics, a clinical-stage immunotherapy company dedicated to transforming the treatment of cancer by developing therapies that enable the immune system to attack tumors and provide long-lasting benefits to patients, priced an upsized IPO above the range and gained 8% in first-day trading.
- REV Group, a leading designer, manufacturer and distributor of specialty vehicles and related aftermarket parts and services, priced above the range and produced a 14% first‑day gain.
- Laureate Education, the largest global network of degree-granting higher education institutions, with more than one million students enrolled at 71 institutions in 25 countries on more than 200 campuses, priced an upsized IPO below the range and declined 5% in first-day trading.
- Ramaco Resources, a developer of high-quality, low-cost metallurgical coal in central and southern West Virginia, southwestern Virginia and southwestern Pennsylvania, priced at the midpoint of the range and ended its first day of trading with a gain of less than 1%.
- Foundation Building Materials, the second largest specialty distributor of wallboard and suspended ceiling systems in the United States and Canada, and the fastest growing by revenue and branch count since its founding in 2011, priced below the range and ended its first day of trading up 11% from its offering price.
- Hamilton Lane, a global private markets investment solutions provider with approximately $40 billion of assets under management and approximately $292 billion of assets under advisement, priced at the midpoint of the range and gained 13% in first-day trading.
- Snap, whose flagship product, Snapchat, is a camera application that was created to help people communicate through short videos and images, priced above the range and gained 44% on its first day of trading.
- BeyondSpring, a global clinical-stage biopharmaceutical company focused on the development of innovative cancer therapies, priced at the low end of the range and ended its first trading day down 16% from its offering price.
- J.Jill, a nationally recognized women’s apparel brand focused on a loyal, engaged and affluent customer in the attractive 40-65 age segment, priced below the range and declined 3% in first-day trading.
- Presidio, a leading provider of information technology solutions to the middle market in North America, priced at the low end of the range and produced a 2% first‑day gain.
- Ardagh Group, a leading supplier of innovative, value-added rigid packaging solutions with products including metal and glass containers primarily for food and beverage markets, priced within the range and ended its first ended its first day of trading with a 21% gain.
- Canada Goose Holdings, a designer, manufacturer, distributor and retailer of premium outerwear for men, women and children, priced above the range and gained 27% on its first day of trading.
- MuleSoft, a company that assists organizations to change and innovate faster by making it easy to connect the world’s applications, data and devices, priced above an upwardly revised price range and ended its first day of trading up 46% from its offering price.
- ProPetro Holding, a growth-oriented, Midland, Texas-based oilfield services company providing hydraulic fracturing and other complementary services to leading upstream oil and gas companies engaged in the exploration and production of North American unconventional oil and natural gas resources, priced an upsized IPO below the range and gained 4% on its first day of trading.
- Alteryx, a leading provider of self-service data analytics software that enables organizations to dramatically improve business outcomes and the productivity of their business analysts, priced at the high end of the range and ended its first day of trading up 11% from its offering price.