Traders on the floor of the New York Stock Exchange on Jan. 7, 2021.
NYSE
Petco is leading a slate of high-profile companies going public next week as January shapes up to be a big month for initial public offerings.
IPOs took a slight holiday break before returning this week, with a pair that posted strong results. Two biotech companies, Cullinan Management (ticker: CGEM) and Gracell Biotechnologies (GRCL), soared in their first day of trading Friday. Cullinan rallied 42% while Gracelle gained nearly 32%.
So far this month, 11 IPOs, including the seven slated to go public during the week of Jan. 11, are expected to raise $5.4 billion, according to Dealogic. This is the most since 2018, when 20 companies collected $9.3 billion, the data provider said.
A surging U.S. stock market, which continues to climb to new highs this month, is serving as a lure for companies who want to go public, said Gregg Nabhan, global vice chairman of equity capital markets at Bank of America. “The U.S. has an incredibly strong DNA of innovation, commerce and capitalism. These three things allow world class companies to be founded, built and developed, and ultimately [offered in IPOs],” he said.
Tailwinds from 2020’s hot IPO market are helping to drive new issues this year, said Kathleen Smith, a principal with Renaissance Capital. The Covid-19 pandemic also caused roadshows to go digital, which has cut the length of the process of introducing companies to investors to four to five days, down from eight days, said BofA’s Nabhan. This is helping companies go public more quickly. For example, Gracell only needed about three months to launch its offering, as its marketing process first started in early October.
“We are likely to see a record amount of capital raised this January,” Smith, of Renaissance Capital, said.
BofA’s Nabhan thinks roadshows will largely remain online. “Investors think [digitized roadshows are] great. If buyers think it’s great, I’m not sure why sellers will want to change it,” he said.
The biggest deal so far in 2021 is expected to be Petco, which could raise as much as $816 million. The provider of pet health and wellness is scheduled to price its deal on Wednesday, Jan. 13 and trade the next day, people familiar with the situation said. Petco is planning to sell 48 million shares at $14 to $16. The San Diego company plans to trade under the Nasdaq symbol “WOOF.”
Petco, which no longer calls itself a retailer, operates about 1,470 pet-care centers that sell food, toys and supplies, while offering professional services like animal grooming, vet care and pet training. The company is highly leveraged and has about $3.24 billion in debt. CVC Capital Partners and the Canadian Pension Plan Investment Board will own nearly 67% of the company after the IPO.
Poshmark and Motorsport Games are also slated to go public the same day as Petco. Poshmark, a marketplace operator for fashion related items, is offering 6.6 million shares at $35 to $39 each. This means Poshmark could raise as much as $257.4 million if it prices at the high end of its range. It is expected to trade on the Nasdaq under the symbol POSH.
Motorsport, the official developer and publisher of the NASCAR video-game racing franchise, plans to sell 2.35 million shares at $16 to $18 each, a prospectus said. It is expected to trade on the Nasdaq under the symbol MSGM.
Affirm, the payments company founded by PayPal (PYPL) co-founder Max Levchin, is scheduled to begin trading on the day before Petco, or Wednesday, Jan. 13. Levchin will have 19.8% voting power in Affirm after the offering. Affirm is slated to trade on the Nasdaq under the ticker AFRM.
Chinese companies listing in the U.S. was one of the biggest trends of last year’s IPO market. That should continue with Kuke Music Holding and Qilian International Holding both slated to make their public equity markets debut on Tuesday, Jan. 12, people said. Kuke is offering 5 million shares at $10 to $12 each. It is expected to trade on the New York Stock Exchange under the symbol KUKE. Kuke, of Beijing, offers classical music licensing, subscription and education services in China.
Qilian makes and sells traditional Chinese medicines and products. The Jiuquan City, China company has been waiting a long time to go public, initially filing for an IPO in November 2019. Qilian is selling 5 million shares at $5 to $7 each. The company is slated to trade on the Nasdaq under the ticker QLI .
Finally, two companies, Driven Brands Holdings and Playtika Holding, are slated to end the week and make their trading debut on Friday, Jan. 15. Driven plans to sell 38 million shares at $17 to $20 each. The company is expected to trade on the Nasdaq under the symbol DRVN.
Driven provides services like vehicle repair, oil change and car wash to customers. Roark Capital will own 47.4% of Driven after the IPO, a prospectus said.
Playtika, a developer of mobile games, is planning to offer 69.5 million shares at $22 to $24 apiece. The company has more than 35 million monthly users of its games, which include Slotmania, Bingo Blitz and Board Kings. It is slated to trade on the Nasdaq under the symbol PLTK.
Write to Luisa Beltran at [email protected]
