The U.S. IPO market is gearing up for another busy week with 14 deals floating around, unless fears of contagion from a possible default by Chinese real estate giant Evergrande lead issuers to postpone their plans.
Chinese markets have sold out on fears that Evergrande will fail to meet outstanding interest payments on its more than $ 300 billion debt. Those fears have heightened concerns about the Chinese government's actions against some of its own tech giants, which have also depressed US-listed stocks of Chinese companies.
See now: Why Evergrande suddenly exploded into a potential global financial market crisis
About 33 Chinese companies went public in the US earlier this year and are now down a total of 27%, said Kathleen Smith, director at Renaissance Capital, a provider of institutional research and IPO-linked exchange-traded funds.
"The rest of the US IPO market appears to be doing very well," Smith told MarketWatch. “So far this year, 52% of all IPOs are above their IPO price and the average return is 13% (or) 18% excluding China. For example, 10 of the 11 IPOs valued in September were above their IPO price and they averaged a 55% return. "
The market was particularly strong last week when 11 deals hit the market with an average return greater than 55% of the asking price and none ended below their asking price. Top performers included Biotech Dice Therapeutics for inflammatory diseases
Coffee trader Dutch Bros Inc.
and enterprise software company ForgeRock Inc.
See now: Drive-through beverage company Dutch Bros is expanding eastward, bringing its Blue Rebel beverages with it
The IPO market has already raised more money this year than any year since 2000 and the dot-com boom, with 294 companies raising $ 100.5 billion to date, Smith said.
"There are 14 IPOs slated this week to raise $ 5.5 billion (and) most of them are software, payments and healthcare IPOs – these have been high-yielding sectors," she said.
The IPO market has grown explosively this year as direct listings and Special Purpose Acquisition Companies (SPACs) grow in popularity. Here are the methods to get a company public and the costs involved.
Also read: The Swiss running shoe manufacturer On relies on the premium market – with the help of a tennis giant
The biggest deal of the week is expected to come from Freshworks
a California-based customer support software company aiming to raise up to $ 969 million by offering 28.5 million shares priced at $ 32 to $ 34 each for a value of $ 9.57 billion. The company raised its proposed price range on Monday from an earlier range of $ 28 to $ 32. Morgan Stanley and JPMorgan are the leading underwriters.
Restaurant payment processor Toast Inc.
aims to offer 21.7 million shares at a price of $ 34 to $ 36 each, and also increased its price range from $ 30 to $ 33 on Monday. It would raise up to $ 781 million at the high end of the range with a valuation of up to $ 18 billion. Goldman Sachs and Morgan Stanley are leading underwriters.
See now: Toast IPO: 5 things you should know about the restaurant-centric payment provider
The global money transfer company Remitly Global is also in the payments sector
aims to raise up to $ 294 million as it is offering 7 million shares in its initial public offering, which is expected to cost between $ 38 and $ 42 per share. The selling shareholders are offering an additional 5.16 million shares to raise up to $ 216.8 million.
The Seattle-based company expects approximately 161.42 million shares outstanding after going public, valued at up to $ 6.78 billion. The stock is expected to be listed on the Nasdaq under the ticker symbol "RELY". Goldman Sachs and JPMorgan are the leading underwriters.
Other offerings include Sovos Brands
whose labels include Rao's Sauce and Noosa Yogurt. The company is offering 23.33 million shares at prices ranging from $ 14 to $ 16 per share. With around 97.39 million shares outstanding after the IPO, the expected price could value Sovos at up to $ 1.56 billion. The share is to be listed on the Nasdaq under the ticker symbol "SOVO". JPMorgan, Goldman Sachs, BofA Securities and Credit Suisse are the leading underwriters.
The Brilliant Earth Group is also in the consumer sector
a digital-first jewelry company aiming to raise up to $ 266.7 million on a valuation of $ 1.51 billion. The stock is expected to be listed on the Nasdaq under the ticker symbol "BRLT". JPMorgan, Credit Suisse, Jefferies and Cowen are the leading underwriters.
Online fashion company a.k.a. Brands
aims to raise up to $ 263.9 million at a valuation of $ 2.46 billion. The California-based company, with a focus on Millennial and Gen-Z consumers, is expected to be listed on the NYSE under the ticker symbol "AKA". BofA Securities, Credit Suisse and Jefferies are the leading underwriters.
The Renaissance IPO ETF
Initial public offering,
has grown 4.3% to date in 2021 and has increased by 35% in the last 12 months. The S&P 500
has increased by 15.4% in the year to date and has increased by 31% in the last 12 months.