If 2019 is indeed the “year of Uber,” then the week ahead can only be the “week of Uber.”

After years of IPO speculation, Uber (UBER) is expected to raise $8.5 billion at the $47 midpoint, with insiders selling $1.3 billion in the overallotment. That is below the last round of $48.77, a smart move given where Lyft (NASDAQ:LYFT) has traded. Unlike most recent tech IPOs, all shares get one vote. Uber will be the largest US IPO since Alibaba (NYSE:BABA) in 2014, and the largest IPO of a US company since Facebook (NASDAQ:FB) in 2012. Not only that, Uber’s IPO tests the extent of Silicon Valley’s philosophy of growth at all costs. The company had an operating loss of -$2.3 billion in 2018, with no sign of profitability in sight. With about $50 billion in gross bookings and $11 billion in revenue, Uber can only justify its $86 billion market cap by scaling its global offering further and then dialing up its take rate (roughly 20%). While revenue has been almost flat in recent quarters, investors may be better off thinking of it like a VC bet in that investors need to think of what it can accomplish in 10 years. Assuming it doesn’t run out of cash by then.

Aside from Uber, the week ahead could see more IPOs than any week since 2015 with 13 deals total. The other 12 are raising $1.5 billion and include six biotechs, a government contractor, an industrial engineering firm, a Texas bank, a post office REIT, a Russian job site, and a rugged phone maker. Two blank check companies also plan to raise $350 million.

Two employee-owned companies are going public this week. Government contractor Parsons (PSN) plans to raise $500 million in the week’s second-largest offering. The company has solid growth, a large market opportunity, and an outstanding governance structure. Parsons is owned by its more than 15,000 employees through an employee stock ownership plan; the ESOP actually took the company private in 1984. The last government contractor was a micro-cap in 2014 (Sysorex), and before that Booz Allen in 2010.

The week’s other ESOP-owned IPO, Mayville Engineering (MEC), is raising $125 million at a market cap of nearly $400 million. MEC manufactures industrial parts for commercial and industrial vehicles.

In a win for capitalism, Moscow-based job recruitment site HeadHunter Group (HHR) is going public in the US, raising $200 million in the week’s third-largest deal. At the $12.25 midpoint, it looks priced to sell, though its market opportunity is more limited than peers, and exposed to a single country’s economy. The last time a Russian company listed in New York: 2013.

U.S. IPO Calendar

Issuer
Business

Deal Size
Market Cap

Price Range
Shares Filed

Top
Bookrunners

Landcadia Holdings II (NASDAQ:LCAHU)
Houston, TX

$250M
$313M

$10
25,000,000

Jefferies

The second blank check company formed by the CEOs of Landry’s and Jefferies to acquire an entertainment business.

Parsons
Centreville, VA

$500M
$2,610M

$26 – $28
18,518,500

Goldman
BofA ML

Provides technology-driven defense, intelligence, and infrastructure solutions.

Applied Therapeutics (APLT)
New York, NY

$60M
$292M

$14 – $16
4,000,000

Citi
Cowen

Phase 2 biotech developing therapies for diabetic cardiomyopathy.

Axcella Health (AXLA)
Cambridge, MA

$75M
$546M

$20 – $22
3,571,428

Goldman
JP Morgan

Developing amino acid-based therapies to treat metabolic dysregulation in the liver.

Cortexyme (CRTX)
South San Francisco, CA

$75M
$476M

$16 – $18
4,412,000

BofA ML
Credit Suisse

Developing a novel therapy for Alzheimer’s disease using a microbe inhibitor.

HeadHunter Group
Moscow, Russia

$200M
$613M

$11 – $13.50
16,304,348

Morgan Stanley
Goldman

Online job recruitment platform in Russia.

Mayville Engineering
Mayville, WI

$125M
$394M

$19 – $21
6,250,000

Baird
Citi

Manufactures components for commercial and industrial vehicle OEMs.

Milestone Pharmaceuticals (MIST)
Montreal, Canada

$75M
$378M

$14 – $16
5,000,000

Jefferies
Cowen

Phase 3 biotech developing therapies for heart rate conditions.

NextCure (NXTC)
Beltsville, MD

$75M
$350M

$14 – $16
5,000,000

Morgan Stanley
BofA ML

Clinical-stage biotech developing next-gen cancer immunotherapies.

South Plains Financial (SPFI)
Lubbock, TX

$63M
$323M

$17.50 – $19.50
3,380,000

KBW
Sandler

West Texas commercial bank with 21 full-service locations.

Health Sciences Acq. (HSACU)
New York, NY

$100M
$125M

$10
10,000,000

Chardan
UBS

Blank check company formed by RTW Investments to acquire a biopharma or medical technology business.

Postal Realty Trust (PSTL)
Cedarhurst, NY

$100M
$144M

$19 – $21
5,000,000

Stifel
Janney

Recently-formed REIT that manages and leases properties to the USPS.

Sonim (SONM)
San Mateo, CA

$50M
$294M

$13 – $15
3,571,429

Oppenheimer
Lake Street Capital Markets

Makes rugged mobile phones and accessories for industrial and public workers.

Uber
San Francisco, CA

$8,460M
$85,861M

$44 – $50
180,000,000

Morgan Stanley
Goldman

Operates the world’s largest on-demand ridesharing network.

Trevi Therapeutics (TRVI)
New Haven, CT

$70M
$243M

$14 – $16
4,666,667

Leerink
Stifel

Developing an extended-release version of an opioid for new indications.

Here are the upcoming IPOs:

Landcadia Holdings II, the second blank check company formed by the CEOs of Landry’s and Jefferies to acquire an entertainment business, plans to raise $250 million by offering 25 million units at a price of $10. At that price, it would command a fully diluted market value of $313 million. Landcadia Holdings II was founded in 2015 and plans to list on the Nasdaq under the symbol LCAHU. Jefferies is the sole bookrunner on the deal.

Applied Therapeutics, a Phase 2 biotech developing therapies for diabetic cardiomyopathy, plans to raise $60 million by offering 4.0 million shares at a price range of $14.00 to $16.00. At the midpoint of the proposed range, it would command a market value of $292 million. Founded in 2016, the New York, NY-based company plans to list on the Nasdaq under the symbol APLT. Citi, Cowen and UBS Investment Bank are the joint bookrunners on the deal.

Axcella Health, which is developing therapies and food to treat metabolic dysregulation in the liver, plans to raise $75 million by offering 3.6 million shares at a price range of $20.00 to $22.00. At the midpoint of the proposed range, Axcella would command a market value of $546 million. Founded in 2008, the Cambridge, MA-based company plans to list on the Nasdaq under the symbol AXLA. Goldman Sachs, J.P. Morgan and SVB Leerink are the joint bookrunners on the deal.

Cortexyme, which is developing a novel therapy for Alzheimer’s disease, plans to raise $75 million by offering 4.4 million shares at a price range of $16.00 to $18.00. At the midpoint of the proposed range, it would command a market value of $476 million. Founded in 2012, the South San Francisco, CA-based company plans to list on the Nasdaq under the symbol CRTX. BofA Merrill Lynch and Credit Suisse are the joint bookrunners on the deal. Insiders intend to purchase up to $35 million of the IPO (47% of deal).

HeadHunter Group, an online job recruitment platform in Russia, plans to raise $200 million by offering 16.3 million shares at a price range of $11.00 to $13.50. At the midpoint of the proposed range, it would command a market value of $613 million. HeadHunter Group, which was founded in 2000, booked $94 million in sales over the last 12 months. The Moscow, Russia-based company plans to list on the Nasdaq under the symbol HHR. Morgan Stanley, Goldman Sachs, Credit Suisse and VTB Capital are the joint bookrunners on the deal.

Health Sciences Acquisitions, a blank check company formed by RTW Investments to acquire a biopharma or medical technology business, plans to raise $100 million by offering 10.0 million units at a price of $10.00. At that price, it would command a market value of $125 million. Founded in 2018, the New York, NY-based company plans to list on the Nasdaq under the symbol HSACU. Chardan Capital Markets and UBS Investment Bank are the joint bookrunners on the deal.

Mayville Engineering, which manufactures components for commercial and industrial vehicle OEMs, plans to raise $125 million by offering 6.3 million shares at a price range of $19.00 to $21.00. At the midpoint of the proposed range, it would command a market value of $394 million. Mayville Engineering, which was founded in 1945, booked $524 million in sales over the last 12 months. The Mayville, WI-based company plans to list on the NYSE under the symbol MEC. Baird, Citi, Jefferies and UBS Investment Bank are the joint bookrunners on the deal.

Milestone Pharmaceuticals, a Phase 3 biotech developing therapies for heart rate conditions, plans to raise $75 million by offering 5.0 million shares at a price range of $14.00 to $16.00. At the midpoint of the proposed range, Milestone Pharmaceuticals would command a market value of $378 million. Founded in 2003, the Montreal, Canada-based company plans to list on the Nasdaq under the symbol MIST. Jefferies, Cowen and Piper Jaffray are the joint bookrunners on the deal.

NextCure, a clinical-stage biotech developing cancer immunotherapies, plans to raise $75 million by offering 5.0 million shares at a price range of $14.00 to $16.00. At the midpoint of the proposed range, NextCure would command a market value of $350 million. Founded in 2015, the Beltsville, MD-based company plans to list on the Nasdaq under the symbol NXTC. Morgan Stanley, BofA Merrill Lynch and Piper Jaffray are the joint bookrunners on the deal. Insiders intend to purchase up to $35 million of the IPO (47% of deal).

Parsons, which provides technology-driven defense, intelligence, and infrastructure solutions, plans to raise $500 million by offering 18.5 million shares at a price range of $26.00 to $28.00. At the midpoint of the proposed range, Parsons would command a market value of $2.6 billion. Parsons, which was founded in 1944, booked $3.6 billion in sales over the last 12 months. The Centreville, VA-based company plans to list on the NYSE under the symbol PSN. Goldman Sachs, BofA Merrill Lynch and Morgan Stanley are the joint bookrunners on the deal.

Postal Realty Trust, a recently-formed REIT that manages and leases properties to the USPS, plans to raise $100 million by offering 5.0 million shares at a price range of $19.00 to $21.00. At the midpoint of the proposed range, it would command a market value of $144 million. Postal Realty Trust, which was founded in 2018, booked $8 million in revenue over the last 12 months. The Cedarhurst, NY-based company plans to list on the NYSE under the symbol PSTL. Stifel, Janney Montgomery Scott, BMO Capital Markets and Height Capital Markets are the joint bookrunners on the deal.

Sonim Technologies, which makes rugged mobile phones and accessories for industrial and public workers, plans to raise $50 million by offering 3.6 million shares at a price range of $13.00 to $15.00. At the midpoint of the proposed range, Sonim Technologies would command a market value of $294 million. Sonim, which was founded in 1999, booked $136 million in sales over the last 12 months. The San Mateo, CA-based company plans to list on the Nasdaq under the symbol SONM. Oppenheimer & Co. and Lake Street Capital Markets are the joint bookrunners on the deal.

South Plains Financial, a West Texas commercial bank with 21 full-service locations, plans to raise $63 million by offering 3.4 million shares at a price range of $17.50 to $19.50. At the midpoint of the proposed range, South Plains Financial would command a market value of $323 million. South Plains Financial, which was founded in 1941, booked $148 million in revenue over the last 12 months. The Lubbock, TX-based company plans to list on the Nasdaq under the symbol SPFI. Keefe Bruyette Woods and Sandler O’Neill are the joint bookrunners on the deal.

Uber Technologies, which operates the world’s largest on-demand ridesharing network, plans to raise $8.5 billion by offering 180.0 million shares at a price range of $44.00 to $50.00. At the midpoint of the proposed range, Uber Technologies would command a market value of $85.9 billion. Uber, which was founded in 2009, booked $11.3 billion in sales over the last 12 months. The San Francisco, CA-based company plans to list on the NYSE under the symbol UBER. Morgan Stanley, Goldman Sachs, BofA Merrill Lynch and Barclays are the joint bookrunners on the deal. PayPal intends to invest $500 million in a concurrent private placement.

Trevi Therapeutics, which is developing an extended-release version of an opioid for new indications, plans to raise $70 million by offering 4.7 million shares at a price range of $14.00 to $16.00. At the midpoint of the proposed range, Trevi Therapeutics would command a market value of $243 million. Founded in 2011, the New Haven, CT-based company plans to list on the Nasdaq under the symbol TRVI. SVB Leerink, Stifel and BMO Capital Markets are the joint bookrunners on the deal. Insiders intend to purchase $28 million of the IPO (40% of the deal).

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 5/2/19, the Renaissance IPO Index was up 34.0% year-to-date, while the S&P 500 had a gain of 17.1%. Renaissance Capital’s IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Elanco (NYSE:ELAN) and VICI Properties (OTC:VICI). The Renaissance International IPO Index was up 14.4% year-to-date, while the ACWX was up 13.0%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include SoftBank and Xiaomi.

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.

Source link

2019-05-04