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Renaissance IPO ETF Could Benefit From New Deals

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The U.S. initial public offering market is heating up once again, with eight deals in the works that are anticipated to raise about $2 billion, commencing with Azek Co., which produces materials for outdoor living products.

Last week was the most hectic one of the year thus far, as eight deals and two special purpose acquisition vehicles (SPACs) reached the market.

“For the first time since June 2018, all eight IPOs raised more than originally expected, either by pricing above the range or upsizing their offerings,” according to commentary from Renaissance Capital, a provider of institutional research and IPO-related exchange-traded funds.

The market underwent a lull in new offerings during the coronavirus pandemic prior to last week’s explosion of deals. While the secondary market has remained hot, with May’s dollar volume of share offerings notching the largest number since 2014, according to BTIG, new issuers have been looking for stocks to stage a recovery from the coronavirus pandemic before dipping their feet into the IPO market.

While there have been 43 IPOs, down 31% from the same time a year ago, the Renaissance IPO (IPO) has been robust in 2020, gaining nearly 23% so far in 2020, largely due to the inclusion of recent IPOs of digital companies and others that investors are favoriting as shelter-in-place restrictions have handicapped workers, leading them to favor working-from-home products and services, such as Zoom and Slack. IPO also added biotech Moderna, which is developing a COVID-19 vaccine, and had a dramatic boost due to favorable trial news.

This week’s biggest deal will be Azek, which will gather $625 million at the high of its price range.

“We are an industry-leading designer and manufacturer of beautiful, low-maintenance and environmentally sustainable products focused on the highly attractive, fast-growing Outdoor Living market,” the company says in its prospectus.

Other notable IPO entries to look out for include Vroom Inc, Vaccine maker Vaxcyte, Burning Rock Biotech, Generation Bio Co., and SPAC Hudson Executive Investment.

According to Renaissance Capital, “[Vaxcyte’s] lead candidate, VAX-24, is a 24-valent investigational pneumococcal conjugate vaccine designed to provide broad-spectrum coverage of Merck’s Pneumovax 23 with an immunogenicity profile comparable to Pfizer’s Prevnar 13.”

Vaxcyte is aiming to push VAX-24 into clinical trials in the second half of 2021.

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