U.S. IPO Week Ahead: One Cannabis SPAC Lights Up A Dim IPO Market

Following the IPO Index’s sharpest drop ever recorded, one cannabis SPAC is keeping the IPO market alive, expected to raise $150 million in the week ahead. Social Capital’s latest SPACs (IPOB.U, IPOC.U) are also eligible to price this week.

Led by former Canopy Growth (OTC:CGC) executives, Collective Growth Corp (CGROU) plans to raise $150 million at a $190 million market cap. The acquisition vehicle intends to focus on ancillary cannabis businesses rather than those that handle the product directly. The cannabis industry has struggled recently; Sundial Growers (NASDAQ:SNDL) became a penny stock this past week, off 94% from its July 2019 IPO, and Tilray (NASDAQ:TLRY), which at one point was flying 800% above issue, is now down 76% from IPO.

Seven cannabis SPACs have IPO’d since 2018, one of which has completed its acquisition: Akerna (KERN; -49% from IPO). The other six trade below issue without warrants, and average a 0.1% return with warrants (GNRSU -2.0%; SRACU +0.5%; MCMJU -0.1%; SSPKU 0.0%; THCAU 0.0%; THCBU +2.0%).

U.S. IPO Calendar
Issuer Business	Deal Size Market Cap	Price Range Shares Filed	Top Bookrunners
Collective Growth Corp Austin, TX	$150M $190M	$10 15,000,000	Cantor Fitz.
Blank check company led by former Canopy Growth execs targeting the cannabis industry.

Volatility is at its highest level since the 2008 financial crisis, effectively shutting down the IPO market. Based on previous periods of high volatility, it will take at least one month after the market settles for IPO activity to resume. While it’s nearly impossible to price a non-SPAC IPO in this market, many companies have joined the pipeline since the sell-off began. These recent filers are some of the most likely candidates to break the ice when markets recover.

14 Recent IPO Filers Await Market Thaw
Issuer Business	Deal Size	Sector	Lead Underwriter
Brilliant Acquisition (BRLIU)	$40M	SPAC	EarlyBird
Blank check company targeting an Asia Pacific business.
Chardan Healthcare Acq 2 (CHAQ.U)	$85M	SPAC	Chardan
Second blank check company formed by Chardan Capital targeting the healthcare industry.
Accolade (ACCD)	$100M	Health Care	Goldman
Provides a platform that helps employees manage their healthcare benefits.
NLS Pharmaceutics (NLSP)	$40M	Health Care	Maxim
Biotech focusing on therapies for CNS and sleep disorders.
ORIC Pharmaceuticals (ORIC)	$86M	Health Care	JP Morgan
Phase 1 biotech developing small molecule therapies for cancer.
Procore Technologies (PCOR)	$400M	Technology	Goldman
Provides cloud-based construction management and collaboration software.
Pulmonx (NASDAQ:LUNG)	$86M	Health Care	BofA
Makes minimally invasive medical devices for emphysema.
Social Hedosophia II (IPOB.U)	$300M	SPAC	Credit Suisse
Second blank check company formed by Social Capital and Hedosophia targeting US tech.
Social Hedosophia III (IPOC.U)	$600M	SPAC	Credit Suisse
Second blank check company formed by Social Capital and Hedosophia targeting ex-US tech.
ZoomInfo (ZI)	$500M	Technology	JP Morgan
Provides a data platform for sales, marketing, and recruiting professionals.
GigCapital3 (GIK.U)	$200M	SPAC	Nomura
Third blank check company led by semiconductor veteran Avi Katz.
Inari (NARI)	$100M	Health Care	BofA
Medical device company for venous diseases.
SelectQuote (SLQT)	$250M	Financials	Credit Suisse
Provides an online DTC insurance platform.
FreeCast (FRCT.RC)	$17M	Technology	Alexander Capital
Provides an integrated platform for video streaming services.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 3/12/20, the Renaissance IPO Index was down 22.3% year-to-date, while the S&P 500 was down 23.2%. Renaissance Capital’s IPO ETF (NYSEARCA:IPO) tracks the index, and top ETF holdings include Uber (NYSE:UBER) and Spotify (NYSE:SPOT). The Renaissance International IPO Index was down 12.3% year-to-date, while the ACWX was down 27.6%. Renaissance Capital’s International IPO ETF (NYSEARCA:IPOS) tracks the index, and top ETF holdings include SoftBank and Adyen.

Original post

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.