After two solid deals priced last week, we are seeing a pickup in activity heading into June. Warmer Music (WME) and ZoomInfo (ZI) just launched their IPO marketing and we expect to see several more kick off this week. There are five of six more high-quality deals ready to launch.
We’ll cover a few of them in the “in the wings” section below. Here are the results for the two deals priced last week:
SelectQuote (SLQT) priced above the range at $20 and has settled in at $27. SLQT is a B2C platform for consumers to find and purchase health, life, auto, and home insurance policies. Revenues are on track to hit at least $500M this year (+45%) and at the current price, the market cap is $4.5B. They combine the pure online model of an Everquote (EVER) with agents and strong carrier relationships. It’s a quality company but the valuation feels pretty full. Especially considering that operating costs are growing faster than revenues (+59% YoY). This is typical when a company needs to “beef up” their G&A in preparation to be a public company but we’ll be watching this metric to see where it goes from here.
Inari Medical (NARI) made a huge jump from their above-the-range pricing at $19 to open at $41.30. Inari has a new treatment for blood clots that offers a better alternative treatment beyond what anticoagulants can do. DVT and pulmonary embolisms are very common so they represent a large potential market. Since the company is in the early stages of commercialization the growth rate is off the charts. Gross margins are at 90% and the company generated 15% net income in Q1 of this year. Sales should come in at over $150M this year with earnings of at least $20M. The current market cap is ~$2B.
A few deals have started marketing to price next week:
Warner Music Group (WMG) - This is a big one at $1.7B, all by selling shareholders. There are 28 banks on the cover. Not sure if that’s a record but it could be close. This is another giant entertainment company with not a lot of growth. Revenues are around $4.5B and profits are slim. Endeavor failed to price its IPO last year. Maybe this time the story is more convincing. We’ll have more, including a full transcript, in the next few days.
ZoomInfo (ZI) is an online B2B marketing database. Basically they build and maintain a large database of contact information that they sell access to in order for companies to market their products and services in a direct, targeted fashion. Whether this is SPAM or not probably depends on who’s looking at it. There is some hair on this one so we’re going to have to spend more time going through the SEC filings. Revenue growth has been very good going from $144M in 2018 to $293M in 2019. The company is profitable at the operating line but over $1.2B in debt generates a loss due to interest expense. The company intends to pay down debt with the IPO proceeds.
Some notable deals we should see marketing soon:
Royalty Pharma (RPHA) buys royalty interests in later stage drugs. It’s a $2B deal. RPHA website.
Vroom (VRM) is an online used car marketplace being brought out by Goldman. Given the success of Carvana (CVNA), this one will probably be hot. Seems like Vroom has better inventory. Here is the website to check it out yourself.
Dada Nexus (DADA), the on-demand retail and delivery platform in China, will be much-anticipated (Goldman).
Shift4 Payments (FOUR) provides secure payment solutions. They seem to be hybrid offering industry-focused solutions where payments are integral. It’ll be interesting to see how they stack up versus Square (SQ).
Hudson investment (HECC) is a SPAC but it’s a pretty big one at $300M being led by Citi so it is one worth watching.
I expect companies are watching for the potential “second wave” effects on the market and bankers are aware that we will be in the midst of an election as they return from summer vacations.
The Candyman
P.S. - Did someone forward this to you? You can join over 2,000 regular readers here:
About IPO Candy
IPO Candy was founded in 2009 to be the best source for IPO information, analysis, insights, and alerts. Top investment banks, investors, and companies planning their IPO enjoy our services. We also maintain a model portfolio, provide investment alerts, and are developing new services all the time so feel free to make suggestions!
DISCLAIMER: What we provide is only for informational use. It is not intended to provide investment, tax, legal, or personal advice. Anything we publish does not constitute a suggestion, solicitation, or offer to purchase or sell securities. We do not warrant the completeness or accuracy of anything and assume no such duty to update such information - although you know we would! For more, please refer to the sections of our website that deal with our terms & conditions and privacy policies.