Activity for initial public offerings remained at low levels in February, with 15 U.S. companies going public, raising a total of $887 million in capital. IPO fundraising is down 72.9% from last February and Is down 90% to $1.3 billion for the first two months of 2019 compared to the first two months of 2018. The end of 2018 and beginning of 2019 are well off of recent highs set in the early summer last year. However, month-to-month, the trend has shifted upward, rising 120% from the $403 million raised in January.
Mergers & Acquisitions: Apollo Global Management Acquires Direct ChassisLink
Pitchbook data reveals that there were 27 M&A transactions last week for total invested capital of $5.03 billion, $27.3 billion less than last week across 10 less deals. Apollo Global Management’s $2.5 billion leveraged buyout of Direct ChassisLink was the largest deal of the week. Publicly traded pharmaceutical manufacturer GTx, Inc. will be acquired by Oncternal Therapeutics in a reverse merger for an undisclosed amount.
Two Companies Raise Roughly $200 Million through Initial Public Offerings
Last week, Shockwave Medical, a medical device manufacturer for cardiovascular health, and Futu Holdings Limited, a Chinese financial brokerage for overseas trading, completed their initial public offerings, raising approximately $200 million combined.
U.S. Adds a Lackluster 20,000 Jobs but the Housing Market Shows Strong Signs of Growth
Among news last week:
Initial Public Offerings: Lyft Files for IPO
Last week, Super League Gaming (live streaming of in-person amateur gamer competitions) and Kaleido Bioscience (clinical-stage healthcare company focused on the human microbiome) completed their initial public offerings. Super League is the first e-sports company to go public.
The stock market continued to rebound from its weak performance in December, as the S&P 500, Dow Jones Industrial Average (DJIA), Nasdaq, and Russell 2000 all climbed 3.0% or more in February. Year to date, the indices are up more than 11.0%. Small stocks appeared to outperform larger stocks, as the Russell 2000 rose 5.1%, outperforming its larger index peers during the month.
Monthly sales of existing homes fell for the third straight month and came in below expectations, signaling a further cooling in the housing market. Weekly jobless claims fell during the week of February 16; however, the four-week moving average rose by 4,000 claims, suggesting a potential shift in long-term labor market trends. Lastly, durable goods orders were up in December on the back of a surge in commercial aircraft orders. However, when adjusting for defense and aircraft orders, durable goods orders fell 0.7% in the month.
Pitchbook data revealed that last week there 37 M&A deals for a total value of $2.48 billion, four more deals for $7.4 billion less capital invested than the prior week. The two largest deals of the week were QlikTech International’s public-to-private buyout of Attunity and Palo Alto Networks’ acquisition of Demisto, both of which were for $560 million in value.
Last week, it was revealed that Pinterest had confidentially filed with the SEC to go public, seeking a $12 billion valuation and joining the collection of tech IPOs slated for 2019. The hot tech startups in the U.S. have stayed private for much longer than traditional companies, as a flurry of private capital has kept them afloat during the last decade. Last September, Pinterest surpassed 250 million monthly active users and grew revenues 50% in 2018 alone.
In last week’s economic news, US job openings reached a record high at 7.3 million, marking 1.2 jobs available for every unemployed person. However, despite the record-breaking job market, the week’s most notable news was a relatively steep decline in retail sales during the month of December. US retail sales dropped 1.2% during the month, or the greatest percent decline in more than nine years.
Data from Pitchbook shows $9.88 billion was invested across 33 deals last week, ten more deals than the week prior but for $3.68 billion less value. The largest deal of the week was private equity firm Thoma Bravo’s $3.7-billion public-to-private leveraged buyout of Ellie Mae, a software provider for the residential mortgage industry.
Last week, three companies priced their IPOs to go public: TCR2 Therapeutics, Stealth BioTherapeutics and Avedro, under the tickers TCRR, MITO and AVDR, respectively. All three companies operate in the healthcare industry, marking the second week in a row that three healthcare companies have gone public. In total, the three companies will raise $223 million in new capital.