The IPO market is set to wrap up a particularly strong month this week, which should see nine deals raise a combined $2.1 billion in proceeds by Friday, June 28.
Last week saw six IPOs and a special purpose acquisition company (SPAC) hit the market, but most headlines concerned the unique direct listing of popular workplace messaging platform Slack Technologies Inc. (WORK). The tech company raised $7.4 billion to become the biggest direct listing since Spotfiy Technology (SPOT) on April 3, 2018, and Slack’s debut was widely deemed another successful proof of concept for the format.
Unlike normal IPOs in which banks try to sell shares to as many investors as possible, direct listings don’t create any new shares and therefore don’t have big first-day gains. In other words, shares just start trading, with the price of the very first trade being the most important barometer of a direct listing’s success. Investors received the direct listing with enthusiasm after the first WORK trade priced at $38.50 per share, far above Wall Street’s expected $26.
The tech streak continues this week with four new deals on the docket as well as four biotech companies and a real estate investment trust (REIT).
Here are the top five by deal size…
No. 5: Adaptive Biotechnologies (ADPT)
Adaptive is a Seattle-based biotech firm with an emphasis on disease diagnostics that specifically utilize immunosequencing tests. This technology lets scientists closely analyze T-cell receptors (TCRs), which are extremely difficult to catalog. While most technology can only track about 30,000 unique TCRs out of an individual’s 100 million, Adaptive’s tech can identify 10 to 15 million. According to IPO research firm Renaissance Capital, the company booked $59 million in revenue between March 2018 and March 2019.
Adaptive is set to sell 12.5 million shares between $15 and $17 each, making for a total deal size of $200 million at the $16 midpoint. That would give the company a market cap of $2.1 billion once shares hit the market. The deal’s top underwriters include Goldman Sachs Group Inc. (GS) and JPMorgan Chase & Co. (JPM), and the stock will trade on the Nasdaq under the ticker “ADPT.”
No. 4: BridgeBio Pharma (BBIO)
BridgeBio primarily develops therapies for the treatment of certain cancers and genetic diseases, including Mendelian diseases that arise from the defect of a single gene. The firm is backed by private equity giant KKR & Co. Inc. (KKR) and boasts an enormous pipeline of 16 drug candidates, including lead the amyloid cardiomyopathy (ATTR) candidate BBP-265 currently in Phase 3 trials.
The company is expected to generate $225 million by offering 15 million shares at a price range of $14 to $16, giving it a $1.73 billion market cap. Goldman and JPMorgan are the deal’s primary bookrunners. Shares will list on the Nasdaq under the ticker “BBIO.”
No. 3: Linx (LINX)
With subscription revenue exceeding R$680 (US$178) million last year, Linx is one of Brazil’s largest cloud-based tech companies. It provides payment solutions to users by helping retailers glean insights from point-of-sale (POS) transaction data. Linx will hit the market at a strong time for the payment-services software stocks, as peers PagSeguro Digital Ltd. (PAGS) and StoneCo Ltd. (STNE) are respectively up 55.6% and 99.2% so far in 2019.
The company is set for a $254 million U.S. debut and will sell 29.3 million shares at a fixed price of $8.68. That would give it a market cap of $1.64 billion. Goldman and Morgan Stanley are the lead underwriters, and shares will list under the ticker “LINX” on the New York Stock Exchange (NYSE).
No. 2: The RealReal (REAL)
The RealReal is the world’s largest online marketplace for consigned luxury goods. By employing consignment experts, the company ensures that each item bought and sold on the marketplace is fully authentic. It occupies a strong position in the burgeoning resale retail market, which is expected to reach total revenues of $41 billion by 2022. The RealReal’s $230 million in sales during the 12 months ended March 31, 2019 ensures the firm already has a large piece of that pie.
The firm is expected to generate $270 million by offering 15 million shares between $17 and $19 apiece, totaling a $1.63 billion market cap. Underwriters include Credit Suisse Group AG (CS) and Bank of America Merrill Lynch. The stock is set to trade on the Nasdaq under the ticker “REAL.”
No. 1: Change Healthcare (CHNG)
The biggest expected IPO of the week is Change Healthcare, a tech-based firm offering billing and collections software that’s used by some of the largest U.S. healthcare providers. According to the company’s website, providers bill roughly $1.7 trillion through Change’s software systems every year. That translated into a whopping $3.3 billion in sales between March 2018 and March 2019.
Change will raise $750 million through the sale of 42.86 million shares between $16 and $19 each. If shares price at the midpoint of that range, the company will achieve a market cap of $5.4 billion. Barclays Plc. (BCS) and Goldman are underwriting the deal, and the stock will list on the Nasdaq under the symbol “CHNG.”