By Emily Bary
The IPO market just had its busiest quarter since 2015, and recent filing activity suggests that the pipeline remains robust.
Sixty companies went public in the U.S. during the second quarter, led mainly by small-cap health care companies, according to data from Renaissance Capital. In total, initial public offerings in the second-quarter raised $13.1 billion, less than the first quarter’s 44 IPOs that raised $15.6 billion.
The largest offering in terms of proceeds, by far, was AXA Equitable Holdings Inc. /zigman2/quotes/203165158/composite EQH +2.57% , which spun out of French insurance company AXA SA /zigman2/quotes/202169431/delayed FR:CS +0.73% . The company, which makes up AXA’s US operations, raised $2.7 billion in its debut. GreenSky Inc. /zigman2/quotes/201854778/composite GSKY +2.78% , a fintech company that enables loans at the point of sale, and BJ’s Wholesale Club Holdings Inc. /zigman2/quotes/203668982/composite BJ -0.13% , a Costco Wholesale Corp. /zigman2/quotes/201191698/composite COST -0.17% competitor, were next on the list, raking in $874 million and $638 million, respectively.
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Among the top IPOs by proceeds were four leveraged buyouts. These included Pivotal Software Inc. , a cloud-software company that spun out of EMC and VMware Inc. /zigman2/quotes/209864107/composite VMW -0.19% , and Ceridian HCM Holding Inc. /zigman2/quotes/201586720/composite CDAY +2.84% , which makes human resources software. Pivotal’s IPO raised $555 million, while Ceridian’s raised $462 million.
About half of all IPOs in the quarter were venture-backed names, according to Renaissance Capital.
Looking at market value, Spotify Technology SA’s /zigman2/quotes/207488629/composite SPOT +1.06% unconventional direct listing valued the company at more than $25 billion, which gave the company the largest valuation at listing since Alibaba Group Holding Ltd. /zigman2/quotes/201948298/composite BABA +0.13% went public in 2014. Spotify didn’t raise money through the direct listing, and the analysts at Renaissance Capital saw “no indications that its untraditional listing process was going to find imitators.”
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The best performing IPOs of the quarter were mainly tech names. Chinese game-streaming company Huya Inc. /zigman2/quotes/204095537/composite HUYA -2.01% topped the list, with its shares returning upwards of 170% since the company went public in May. Huya recently announced a partnership with Tencent.
Other recent tech debuts that were among the top performers include Zuora Inc. /zigman2/quotes/203058166/composite ZUO -3.57% , whose shares have more than doubled since the subscription-software company went public in mid-April, and DocuSign Inc. /zigman2/quotes/205992027/composite DOCU +5.29% , with its stock up more than 80% since the April 26 IPO.
DocuSign’s chief executive officer Dan Springer told MarketWatch recently that an IPO is always a “branding event,” and he believes that his company’s offering has helped customers as well as potential investors realize how large the platform is. “It’s not necessarily bringing more people into a funnel, but it might be accelerating some of those deals,” he said.
The company has been trying to move beyond electronic signatures and areas like document management, so that companies can track all of their agreements and quickly find patterns among them. “We land the customer with signatures and then expand into the broader system of agreement,” Springer said.
DocuSign is the only tech company that went public during the quarter to have positive free cash flow, according to Renaissance Capital.
Zuora Chief Executive Tien Tzuo said in a recent interview with MarketWatch that he thinks investors are starting to understand the company’s business model more, in part because of trends in recent IPO activity. “If you look at companies going public recently, a lot have subscription business models and Wall Street likes it,” he said.
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The worst performers were overwhelmingly biotech companies. Hancock Jaffe Laboratories Inc.’s /zigman2/quotes/205043892/composite HJLI -0.27% stock is down about 30% since the company went public in late May, while Evelo Biosciences Inc. /zigman2/quotes/201757528/composite EVLO +4.18% shares have lost more than 25%.
New filing activity remains strong headed into the second half of the year, with 72 new filings, per Renaissance Capital data. Among big names to look out for are commercial real-estate company Cushman & Wakefield, expected to raise $500, and Chinese car marketplace Cango, expected to rake in $300 million.