U.S. IPO Weekly Recap: Spotify Files For A $1 Billion Non-IPO

The decacorns keep coming. Spotify filed its highly-anticipated F-1, which sets it up for a public listing that could occur in late March.

Spotify

Spotify is not an underwritten IPO. Its owners will simply be able to begin selling their shares on the NYSE. Yet, its $1 billion filing has plenty to analyze, and Renaissance will issue research to our institutional clients. Some quick takeaways: Based on where it has traded privately this year, Spotify could be worth $17 to $25 billion. In 2017, it grew sales by 39% to $5.0 billion. Even Netflix (NASDAQ:NFLX) didn’t put up those numbers. Unlike Netflix, Spotify has a history of massive losses, losing over $300 million in adj. EBITDA in 2017.

In addition to Spotify, the week also saw filings from:

Two fast growing but unprofitable Chinese video streaming services. Two profitable Chinese businesses, hotel franchising and after-school education. Two biotechs in hot spaces, immunotherapy and gene therapy.

7 Filings During the Week of February 26th, 2018

Issuer
Business

Deal
Size

Sector

Lead
Underwriter

Bilibili (BILI)

$400M

Technology

Morgan Stanley

Largest Chinese anime streaming website.

Homology Medicines (FIXX)

$100M

Health Care

BofA ML

Preclinical biotech developing a gene therapy delivery platform for rare diseases.

OneSmart Education (ONE)

$300M

Consumer Discretionary

Morgan Stanley

Provides K-12 after-school education in China.

Unum Therapeutics (UNUM)

$86M

Health Care

Morgan Stanley

Developing antibody-coupled T cell immunotherapies for cancers.

Spotify (Pending:SPOT)

$1,000M

Technology

World’s largest music streaming subscription service.

GreenTree Hospitality (GHG)

$200M

Consumer Discretionary

Morgan Stanley

Franchises over 2,000 economy and mid-scale hotels in China.

iQIYI (IQ)

$1,500M

Technology

Goldman (Asia)

Chinese online television and movie portal owned by Baidu.

Moving on to actual IPOs… 6 more filings from China and biotechs

Spotify grabbed headlines, but iQIYI should get some limelight too. China’s largest online TV and movie platform filed to raise $1.5 billion, triple the size of Dropbox’s proposed offering. It’s now the second-largest deal in the US IPO pipeline. Revenue skyrocketed 55% to $2.7 billion in 2017 as subscribers rose to 51 million, close to what Netflix has in the US. Yet, its gross margin was 0% with operating losses of more than $600 million. It can launch its roadshow on March 14.

Chinese anime video sharing app Bilibili filed to raise $400 million; it nearly quadrupled sales in 2017 to about $400 million and approached breakeven adj. EBITDA. Shanghai-based OneSmart Education Group filed to raise $300 million; it grew 35% in 2017, and with over $300 million in sales, it is larger than last year’s four Chinese education IPOs. Profitable hotel franchisor GreenTree Hospitality filed to raise $200 million in the US.

Immunotherapy biotech Unum Therapeutics plans to raise $86 million, while gene therapy biotech Homology Medicines filed to raise $100 million. It is worth noting that this year’s best-performing IPOs are the two biotechs developing gene therapies (Solid Biosciences (NASDAQ:SLDB)) and immunotherapies (ARMO BioSciences, (NASDAQ:ARMO)).

Private Company News: Glassdoor and NIO prep IPOs

News broke this week that jobs website Glassdoor was prepping a 2018 IPO, along with Chinese electric vehicle startup NIO.

Just One IPO This Past Week, a Blank Check

Blank check company Union Acquisition became the year’s ninth SPAC to IPO. Led by Union Group’s Juan Sartori and Atlantic-Pacific Capital’s Kyle Bransfield, it raised $100 million to acquire a Latin American business.

In other SPAC news, VC-backed tech startup Phunware announced that it would go public by being acquired by 2016 SPAC Stellar Acquisition III (STLRU) for $310 million.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index has returned 0.5% year-to-date and the S&P 500 is up 0.5%. Renaissance Capital’s IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Snap (NYSE:SNAP) and US Foods (NYSE:USFD). The Renaissance International IPO Index is up 3.2% year-to-date, while the ACWX is down 0.5%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Orsted (DONG Energy) and ASR Nederland.

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