Just when things seemed quiet on the Initial Public Offering (IPO) front, Arm caused some market excitement with its recent listing and then Instacart and Klaviyo followed suit.
Strong debuts could be enough to thaw some of the IPO freeze seen in the last 18 months. Year-to-date, there have been 84 traditional IPOs, that's according to Dealogic. In 2021, however, global markets delivered 2,682 IPOs raising $608bn (£500.54bn), including 459 IPOs in EMEA, raising $99bn.
So let’s take a look at some of the most well known IPOs so far this year that have made headlines and moved the markets.
As noted, British chip designer Arm drew big investor interest after it signed up 28 banks, including Barclays (BARC.L), Goldman Sachs (GS), JPMorgan Chase & Co (JPM) and Mizuho Financial Group (MFG), for its blockbuster IPO on 14 September with its shares now trading on the Nasdaq (^IXIC) under the symbol “ARM.”
Shares in the company surged on its opening day after Japanese group SoftBank (SFTBY), which owns Arm, offered 9.4% of the company’s stock on the public market but still retained 90% after the IPO.
Arm shares were priced at $51 before trading began, the top end of a range starting at $47, giving the company a market valuation of $52.3bn.
It was expected that the IPO would raise about $4.9bn for SoftBank, which paid $32bn to acquire Arm in 2016.
The Arm IPO created waves because the company designs the much sought after microchips, which it then licences out to other companies.
Televisions, smartphones, drones, smart homes, smart cars, wearable tech, and electronic passports all use its technology and given the ongoing global microchip crisis, Arm’s strategic importance has become more significant than ever.
“The company has exhibited robust financial performance, and its strategic advantages are manifold. These include a wide range of applications for its technology, a deep intellectual property moat, and established partnerships with key industry players,” Matt Oguz, founding partner at San Francisco-based Venture Science, said.
“Its substantial contributions to the ecosystem of connected devices make Arm an attractive proposition for investors looking to capitalise on the continued growth of IoT, AI, and edge computing,” he added.
However, Greg Martin, a managing director at middle-market investment bank Rainmaker Securities, told Yahoo Finance Live that the next few new issuances are more likely truly representative of whether there's a real reopening of the IPO market.
The next test came on Tuesday 19 September when Instacart began trading on the Nasdaq under the ticker symbol "CART". It’s shares jumped more than 10% on its first day of trading.
The San Francisco-based e-commerce company, which filed for the initial public offering (IPO) as "Maplebear", priced its IPO of stock at $30 a share, raising around $660m (£532.7m) for the grocery delivery company.
On a fully diluted basis, the listing valued the group at around $10bn, less than a quarter of its private valuation two years ago.
Taking another cue from Arm, Instacart also lined up big investors to support its listing, including PepsiCo (PEP), which was poised to buy $175m of Instacart’s preferred convertible stock, according to Bloomberg.
Instacart also enlisted Norway’s Norges Bank, TCV, Sequoia, D1 Capital Partners LP and Valiant Capital Management as cornerstone investors.
Marketing automation company Klaviyo also debuted on the New York Stock Exchange on Wednesday 20 September, a day after Instacart started trading on the Nasdaq.
The software firm was valued at $9.2bn after selling shares at $30 a piece in its IPO late Tuesday.
Its stock rose 9.2% at market open and closed the session at $32.76, declining throughout the day after opening at $36.75.
The company, which helps businesses better target their email and text message marketing to shoppers, had said it would sell 19.2 million shares at a range of $25 to $27 a share under the symbol “KVYO”.
Like Arm and Instacart, Klaviyo also has big backers, including one of its biggest sources of business, Shopify (SHOP).
As of the end of 2022, about 77.5% of Klaviyo’s annualised recurring revenue, or value of its existing paid subscriptions, was derived from customers who also use Shopify, the company said.
Despite the excitement around the Arm, Instacart and Klaviyo listings, Isabel Friedheim, founder and chairwoman of Athena, told Yahoo Finance that the IPO window continues to be largely shut - and highlighted that IPO returns have been somewhat similar tracking with A special purpose acquisition company (SPAC) returns.
“Three years ago in 2020 and 2021, well north of 400 IPOs that raised $170m versus a fraction of that today.
“The opportunity for a window opening is going to be predicated on the comfort and clarity around the core issues that are prolonging this shut window. And that includes fears of recession, inflation, political divisiveness, and so on. But notwithstanding headwinds, the better companies can go public through an IPO. But it's rare. We saw it with Arm and Instacart. And those companies can access the public equity markets, which is again the largest pool of capital in the world.”
However, such companies, and Klaviyo, are still subject to all the forces of the current investor mindset, which are downside protection, risk aversion, and a decline in equity investments.
Shares in RayzeBio were down 0.81% on Friday after its stock opened with a big gain on 15 September after the radiopharmaceuticals developer raised around $290m through an upsized IPO.
The San Diego-based company’s stock was at $25 after being priced at $18 per share, and hit a high of $26 at one point.
RayzeBio offered 16.1 million shares in total with a selling shareholder offering an additional 1.2 million shares.
The company, which says on its website that it has created a pipeline of multiple drug candidates in therapeutic areas with significant market opportunities, said it had planned to offer 13.2 million shares priced between $16 and $18, which would have raised around $224m if priced somewhere in the middle.
The IPO marks one of the biggest in the biotech sector this year after Acelyrin raised $540m in May.
In the broader life sciences, however, the largest IPO was from Kenvue, the consumer health spinout of Johnson & Johnson, which raised $4.3bn, according to biopharmadive.com.
Taking a look at Acelyrin, as noted, it raised $540m in May, the largest IPO for a biotech company since 2021, debuting its shares on 5 May at $18 on the Nasdaq.
Its stock swiftly rose to a high of almost $28 but then tumbled more than 50% after the California-based company's experimental lead drug trial failed to show superiority to placebo in reducing symptoms of an inflammatory skin disease.
However, the company is still well funded, with cash reserves of around $823m at the end of June.
"The consistent and early achievement of HiSCR100, along with our prior izokibep experience in Psoriatic Arthritis, continues to demonstrate the potential of izokibep for resolution of disease, especially in difficult to treat tissues," Acelyrin chief executive, Shao-Lee Lin, said in a statement.
On September 22, however, it share price was back int he green, up nearly 2% pre-market.
At the end of August, Johnson & Johnson (J&J) forecast double-digit profit growth for 2023 after spinning off consumer health company Kenvue and unveiled the first outlook for its standalone drugs and medical device businesses.
J&J finalised the biggest shake-up in its 137-year history earlier this month through an exchange of its shares with Kenvue's, leaving the pharmaceutical giant with a reduced 9.5% stake in its former unit.
Kenvue debuted on the New York Stock Exchange in May and has a market capitalisation of nearly $79bn, with J&J generating $13.2bn in cash proceeds as a result of its debt offering and initial public offering, Reuters reported.
"The main driver for this transaction always has been the strategic rationale of having both companies be more agile, flexible and focused for success in their respective industries," J&J CFO Joseph Wolk said.
J&J said it expects 2023 adjusted reported earnings per share of $10 to $10.10.
The company also said it would present its consumer health business as discontinued operations and record a gain of $20 billion in the third quarter as a result of the spinoff, Reuters also reported.
Shares in Kenvue, however, have steadily declined since its debut.
Meanwhile, Neumora is also a noteworthy IPO after it sold 14.7 million shares at $17 apiece to bring in $250m in gross proceeds from its IPO.
Shares started trading on Friday 15 September on the Nasdaq stock exchange under the ticker symbol "NMRA." However, its stock was down nearly 20% on Wednesday 20 September and declined a further 2.90% on Monday 22 September after hours.
The clinical-stage biopharmaceutical company describes on its website how it was founded to improve the lives of patients with brain diseases.
“ We’re focused on advancing medicines for therapeutically relevant targets implicated in CNS diseases, targeting novel mechanisms of action with best-in-class pharmacology. We are also leveraging a precision medicine approach to better understand the biological drivers of brain diseases and to identify targeted patient populations of interest,” a company statement reads.
JP Morgan, BofA Securities, Stifel, Guggenheim Securities, RBC Capital Markets, and William Blair acted as joint book-running managers for the IPO offering.
Abu Dhabi National Oil Company (ADNOC)
On 13 March, the Abu Dhabi National Oil Company (ADNOC) started trading its shares on the Abu Dhabi Securities Exchange (ADX) following the successful completion of its IPO.
The IPO raised proceeds of around $2.5bn through the offering of approximately 5% of the Company’s total issued share capital.
It is the biggest company to list so far this year after it went public in its home country at a market valuation of just below $50bn. The share sale raised about $2.5bn.
Importantly to investors, ADNOC Gas has access to 95% of the UAE's natural gas reserves, which are estimated to be the 7th largest natural gas reserves globally.
Moreover, it supplies over 60% of the UAE's sales gas needs as well as possessing a diverse customer base in over 20 countries.
It was announced in February that Nextracker’s initial public offering would be 26.6 million shares of its Class A common stock at an initial price of $24 per share.
The subsidiary of Flex Ltd. (FLEX) started trading on the Nasdaq Global Select Market under the ticker symbol “NXT” on 9 February 2023 and partnered with Barclays to raise $734m through its IPO and $662m through its first follow-on offering in July 2023.
Since the beginning of March, its stock has climbed about 20%.
The solar technology company, which makes and sells products such as trackers capable of suiting solar panels mounted on different terrains, was co-founded in 2013 by Dan Shugar, with a mission to increase clean energy supply by making solar energy more widely accessible.
It is certainly a concept that has cheered investors with Wells Fargo giving it a $44 price target on 19 September.
CAVA Group (CAVA)
CAVA Group’s IPO took place in June and its stock surged 117% during its debut. However, its stock has fallen about 20% since then.
The Mediterranean restaurant chain, which has a retail presence all over the US, sold 14.4 million shares at opening and raised nearly $318m with its stock closing at $43.78 per share.
Its closing price on its debut gave it a market value of roughly $4.88bn - and Cava was widely considered the first high-profile IPO since 2021.
Executives at the restaurant chain, which was founded in 2011 by three Maryland natives, said the influx of funding would allow the firm to open a number of new locations.
It currently has 263 restaurants in operation, according to its S1 filed with the Securities & Exchange Commission (SEC) ahead of the IPO.
On 12 September, German footwear brand Birkenstock also filed for an initial public offering in the US, becoming the second big European company to seek a foreign listing this month.
Its filing revealed that net revenue for the six months ended 31 March rose 19% to €644.17m, while profit fell 45.3% to €40.21m.
The sandal maker's IPO also follows the marketing blitz around blockbuster movie "Barbie", in which star Margot Robbie was seen donning a pair of pink Birkenstocks.
Birkenstock said it intends to list its shares under the "BIRK" ticker on the New York Stock Exchange.
Goldman Sachs, J.P. Morgan and Morgan Stanley are the lead underwriters for the IPO, which is expected in mid-October.
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