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US IPO Week Ahead: The IPO market braces for a September SNOWstorm in a 12 IPO week

The post-Labor Day IPO frenzy is here as 12 IPOs plan to raise $6.8 billion in the coming week, led by cloud data
unicorn Snowflake (SNOW). It is expected to be the biggest week for the IPO market by deal count and proceeds since May 2019, when Uber went public.

The largest deal of the week, Snowflake (SNOW) plans to raise $2.2 billion at a $28.2 billion market cap. The company plans to raise over $800 million from Berkshire Hathaway and Salesforce.com in a concurrent private placement. Snowflake provides a cloud-based data warehousing platform that is available on the three major public clouds. While it will likely remain unprofitable in the near term, the company is growing fast (+174% y/y) and should benefit from the ongoing shift to cloud.

Unity Software (U) plans to raise $950 million at an $11.7 billion market cap. The company is a leading software platform for creating and monetizing video games, responsible for over 50% of the top 1,000 games in Apple’s app store and Google Play. Targeting a large addressable market, Unity is fast-growing with solid gross margins, but high R&D spend has led to substantial losses.

Rank Group spinoff Pactiv Evergreen (PTVE) plans to raise $800 million at a $3.4 billion market cap. Pactiv is the largest North American maker of packaging for the foodservice, food merchandising, and beverage industries, with a #1, #2, or #3 market share in 80% of its products. The company plans to use IPO proceeds to pay down debt, though it will still be highly leveraged post-IPO.

Telehealth provider American Well (AMWL) plans to raise $525 million at a $3.6 billion market cap. The company allows customers to augment existing health plans and providers with subscription-based tools and other services. While it is highly unprofitable with a large accumulated deficit, the company has benefited from the accelerated adoption of telehealth services during the pandemic.

JFrog (FROG), which sells software tools that streamline app development, plans to raise $405 million at a $3.6 billion market cap. With strong revenue growth and positive cash flow, the company has attracted a sticky customer base of over 5,800 customers. However, ARR growth and retention have been impacted by COVID, and insiders are selling on the IPO.

Sumo Logic (SUMO) plans to raise $281 million at a $2.3 billion market cap. The company provides a SaaS monitoring and analytics platform to its more than 2,000 enterprise customers. Fast-growing and unprofitable, the company has demonstrated consistently high dollar-based net retention, though it has experienced a pandemic-driven increase in customer churn. Existing shareholder Tiger Global plans to buy 10% of the IPO.

Commercial REIT Broadstone Net Lease (BNL) plans to raise $603 million at a $2.8 billion market cap. The REIT’s portfolio consists of 633 properties across the US and Canada, and tenants include large names such as Red Lobster and Siemens. However, only 16% of its annualized base rent came from investment grade tenants as of 6/30/20. Broadstone plans to offer a 5.6% yield at the midpoint.

StepStone Group (STEP) plans to raise $280 million at a $1.6 billion market cap. The global private markets investment firm provides customized investment solutions and advisory and data services to clients. The company oversaw $292 billion of private markets allocations as of 6/30/20, though its operations were hit hard by the pandemic.

Brazilian digital education provider Vitru (VTRU) plans to raise $258 million at a $541 million market cap. The company is a leading postsecondary digital education provider in Brazil, offering distance learning products as well as in-person tutoring services. The company’s margins expanded in the 1H20, though revenue growth decelerated.

Outset Medical (OM) plans to raise $175 million at a $1.0 billion market cap. The company provides a hemodialysis system for acute care and home settings, designed to be lower-cost and easier to use than competitors. It is still commercializing in the home market, for which its device was approved in March 2020. Highly unprofitable, the company has generated negative gross margins to date.

Rare disease biotech Dyne Therapeutics (DYN) plans to raise $175 million at a $782 million market cap. The early-stage company is developing oligonucleotide therapies for rare muscular diseases, and it plans to submit INDs for its three lead programs between the 4Q21 and the 4Q22.

NASH biotech Metacrine (MTCR) plans to raise $85 million at a $364 million market cap. The company is developing differentiated therapies for liver and GI diseases, and it is currently in a Phase 1 trial for its FXR agonist therapies for NASH. While there are no approved therapies for NASH, several competitors are in later stage trials.

U.S. IPO Calendar
Issuer
Business
Deal Size
Market Cap
Price Range
Shares Filed
Top
Bookrunners
Outset Medical (OM)
San Jose, CA
$175M
$1,002M
$22 – $24
7,600,000
BofA
Morgan Stanley
Provides a hemodialysis system for kidney diseases.
JFrog (FROG)
Netanya, Israel
$405M
$3,549M
$33 – $37
11,568,218
Morgan Stanley
JP Morgan
Sells software tools that streamline app development.
Metacrine (MTCR)
San Diego, CA
$85M
$364M
$12 – $14
6,540,000
Jefferies
Evercore ISI
Phase 1 biotech developing FXR agonist therapies for NASH.
Snowflake (SNOW)
San Mateo, CA
$2,240M
$28,216M
$75 – $85
28,000,000
Goldman
Morgan Stanley
Provides a cloud-based data warehousing platform.
StepStone Group (STEP)
New York, NY
$280M
$1,557M
$15 – $17
17,500,000
JP Morgan
Goldman
Global private markets investment firm.
Amwell (AMWL)
Boston, MA
$525M
$3,637M
$14 – $16
35,000,000
Morgan Stanley
Goldman
Provides a telehealth platform and specialists for insurers and providers.
Broadstone Net Lease (BNL)
Rochester, NY
$603M
$2,816M
$17 – $19
33,500,000
JP Morgan
Goldman
Single-tenant commercial net lease REIT with 633 properties in the US and Canada.
Dyne Therapeutics (DYN)
Waltham, MA
$175M
$782M
$16 – $18
10,300,000
JP Morgan
Jefferies
Preclinical biotech developing oligonucleotide therapies for rare muscular diseases.
Pactiv Evergreen (PTVE)
Lake Forest, IL
$800M
$3,425M
$18 – $21
41,026,000
Credit Suisse
Citi
The largest manufacturer of fresh food and beverage packaging in North America.
Sumo Logic (SUMO)
Redwood City, CA
$281M
$2,336M
$17 – $21
14,800,000
Morgan Stanley
JP Morgan
Provides on-demand cloud log management solutions to enterprises.
Vitru (VTRU)
Santa Catarina, Brazil
$258M
$541M
$22 – $24
11,230,126
Goldman
BofA
Provides online and tutored post-secondary education services in Brazil.
Unity Software (U)
San Francisco, CA
$950M
$11,727M
$34 – $42
25,000,000
Goldman
Credit Suisse
Provides a real-time 3D video game development platform.

Sign up for a free trial of our premium platform, IPO Pro. Follow us on Twitter (@IPOtweet) and register for our updates on the IPO market.

Street research is expected for four companies in the week ahead. On Monday, 9/14: Harmony Biosciences (HRMY) and Inhibrx (INBX). On Tuesday, 9/15: Kymera Therapeutics (KYMR) and Nano-X Imaging (NNOX).

IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 9/10/20, the Renaissance IPO Index was up 53.4% year-to-date, while the S&P 500 was up 3.4%. Renaissance Capital’s IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Zoom Video (ZM) and Uber (UBER). The Renaissance International IPO Index was up 34.6% year-to-date, while the ACWX was down 5.0%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Xiaomi and Meituan-Dianping.
The article US IPO Week Ahead: The IPO market braces for a September SNOWstorm in a 12 IPO week originally appeared on IPO investment manager Renaissance Capital’s web site renaissancecapital.com.

Investment Disclosure: The information and opinions expressed herein were prepared by Renaissance Capital’s research analysts and do not constitute an offer to buy or sell any security. Renaissance Capital’s Renaissance IPO ETF (symbol: IPO), Renaissance International ETF (symbol: IPOS), or separately managed institutional accounts may have investments in securities of companies mentioned.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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