2Q15 IPO & SECONDARY
SYNDICATE SUMMARY & OUTLOOK

Argus Custom Research for Triad Securities Corp. July 16, 2015

HIGHLIGHTS OF 2Q


  • Consumer stocks topped the IPO performance leaderboard in 2Q15.
  • Top-performing companies from the sector included Etsy Inc. (ETSY), which opened up 94% from its indicated price; Shopify Inc. (SHOP), which opened up 65%; and Fitbit (FIT), which opened up 52%.
  • Morgan Stanley was lead book-runner for two of the three (SHOP and FIT) and was a top performer among leading IPO bookrunners (Table 1).

SECONDARY ISSUANCE IN 2Q15


  • During the second quarter of 2015, 196 public companies issued secondary public offerings on domestic exchanges, down 14% from the 229 SPOs launched in 1Q15 (Table 3).
  • The total amount of funds raised declined 19%, to $53.4 billion in 2Q15 from $66 billion in 1Q15.
  • On a per-deal basis, the 2Q15 secondaries each raised an average $273 million, while the 1Q15 secondaries each raised an average $287 million.

SECONDARY PERFORMANCE


  • The secondaries with the strongest performance in 2Q, based on opening price vs. issue price, were:
    • Fate Therapeutics (FATE, 23.8%, Leerink Partners)
    • American Superconductor Corp. (AMSC, 19%, Cowen & Co.)
    • Auris Medical Holding AG (EARS, 15.8%, Leerink Partners)
    • Trillium Therapeutics (TRIL, 13.1%, Leerink Partners)
    • Biodel Inc. (BIOD, 12%, William Blair).
  • Among companies issuing secondaries in 2Q15, about 45% had positive first-day performance; about 2% were unchanged; and about 53% were down on the first day
  • Secondaries with strong cumulative performance in the quarter were:
    • Affimed NV (122%, 5/7/15, Jefferies)
    • Adeptus Health Inc. (50%, 5/6/15, Goldman Sachs)
    • Innocoll AG (50%, 4/24/15, Piper Jaffrey)
    • Raptor Pharmaceutical (49%, 4/2/2015, Citigroup Global Markets)
    • Agenus Inc. (44%, 5/21/15, Jefferies & Co.)
  • The average first-day return for secondaries in 2Q15 was -0.1%, versus a 0.5% increase in the Russell 3000. The average cumulative return for secondaries in 1H15 was -0.3%, compared to a 1.2% increase in the Russell 3000.

SECONDARY SECTORS


  • The most-active sectors for secondaries in 2Q15 were Healthcare, Financials, Energy and Consumer Discretionary (Table 4).
  • Sectors that showed momentum through an increased number of issuances in 2Q included Consumer Discretionary, Consumer Staples and Industrials.
  • Sectors that cooled off a bit included Energy and Technology.

CONCLUSION & OUTLOOK


  • Publicly traded companies seeking funds for working capital and general corporate purposes - as well as for ongoing exit strategies for owners - continued to access the secondary market in 2Q15, though not as extensively as they did in 1Q.
  • Although the number of deals slipped slightly in 2Q, the quality increased as more funds were raised on a per-deal basis. Leading fund-raisers in the quarter included Hilton Worldwide Holdings (HLT, Deutsche Bank), Telefonica Brasil (VIV, Itau BBA) and Frontier Communications (FTR, JPMorgan).
  • Given recent trends in the dollar, interest rates and global economic conditions, we would expect the issuance of secondaries to pick up somewhat later in the year (after the summer vacation season) with the Consumer and Biotech sectors continuing to lead the way. A stable dollar could also lead to a recovery in Energy and Industrial deals.


Disclaimer Information


Copyright Argus Research Company. This report has been prepared for Triad Securities Corp. by Argus Research, a thirdparty investment research company. This report has no regard to specific investment objectives, financial situations or the particular needs of any recipient. It should not be considered an individualized recommendation. All investors are encouraged to use multiple sources of investment information and to actively monitor their holdings. The security or industry discussed may not be suitable for everyone.

THIS REPORT IS BASED ON INFORMATION FROM A VARIETY OF SOURCES AND STATISTICAL DATA BELIEVED TO BE RELIABLE, BUT IN NO WAY ARE WARRANTED AS TO ACCURACY, TIMELINESS, COMPLETENESS OR RELIABILITY.

Any opinions expressed are statements of judgment by Argus as of the published date of this report and are subject to change without notice. Argus does not undertake to advise you, nor is it under any obligation to advise you, as to any changes in its estimates or views. This report is published for informational purposes only and is not to be construed as a solicitation or an offer to buy or sell any security. Argus, its affiliates, officers, directors, employees, stockholders or members of their families may have long and/or short positions in and may purchase or sell from time to time any of the above-mentioned or related securities.

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Table 1: LEADING 2Q15 IPO BOOKRUNNERS


Bookrunner #Leading
or Sole Bookrunner
Avg. Change Indicated Price to Open
Goldman Sachs 9 16.5%
Morgan Stanley 9 28.4%
UBS Securities 8 -5.1%
JP Morgan 7 17.6%
Citigroup 7 0.4%
Bank of America Merrill Lynch 6 23.7%
Barclays 6 8.6%
Jefferies 5 14.0%
Aegis Capital 3 -0.7%
Credit Suisse 2 -2.2%


Table 2: LEADING 2Q15 SECONDARY BOOKRUNNERS


Bookrunner #Leading
or Sole Bookrunner
Avg. Change Indicated Price to Open
Goldman Sachs 9 16.5%
Morgan Stanley 9 28.4%
UBS Securities 8 -5.1%
JP Morgan 7 17.6%
Citigroup 7 0.4%
Bank of America Merrill Lynch 6 23.7%
Barclays 6 8.6%
Jefferies 5 14.0%
Aegis Capital 3 -0.7%
Credit Suisse 2 -2.2%




Table 4: 2Q15 SECONDARIES BY SECTOR


Sector # % of
total
Avg. Change Indicated Price to Open
Consumer Discretionary 21 11% 2.2%
Consumer Staples 8 4% 1.5%
Energy 23 12% -0.6%
Financial 37 19% 0.2%
Healthcare 61 31% 3.6%
Industrials 17 9% 3.1%
Information Technology 14 7% 2.8%
Materials 6 3% 0.0%
Telecommunications 3 2% 2.3%
Utilities 6 3% -0.2%


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