In what was predicted to be a busy market in the first half of 2020, the IPO market has mostly cooled off due to investment fears surrounding the coronavirus. Last week only saw the introduction of two blank check companies. The week ahead has introduced one medical platform and one planned biotech. During this time, investors are positioned to watch for mergers and acquisitions over new public offerings.
Investment director at AJ Bell Russ Mould told MarketWatch that the recent decline in the stock market will hurt the IPO market for two reasons: "First, nervous investors are likely to want to keep some cash as a buffer against further falls and also as a useful resource should they feel stocks become oversold. Second, the implicit drop in the valuation multiples attached to quoted comparable peers may deter potential sellers from coming to market, amid fears they will get a dissatisfactory price for their equity."
Last week saw the introduction of the SPAC dMY Technology Group (NYSE: DMYT.U), which raised $200 million at a market capitalization of $250 million. The stock was set to $10 per share with about 23 million shares offered on February 21. The blank check company plans to use the money raised from the IPO to acquire a mobile app company that specializes in consumer products like dating or gaming.
East Stone Acquisition Corp. (NASDAQ: ESSCU) also entered public trading last week, with the black check company aiming to use the capital raised to target fintechs in North America and Asia. The SPAC raised $120 million from 12 million shares offered at $10 each.
For this current week, Chinese medial information platform Zhongchao (NASDAQ: ZCMD) priced its U.S. IPO at $4 per share, raising $12 million from 3 million offered shares. The platform offers consumers medical information, education and training.
Finally, scheduled to launch later this week, Passage Bio is planning to trade on the global Nasdaq. The Pennsylvania-based biotech is still a company in its earlier stages. The company plans to offer 7.4 million shares priced between $16-$18 to close out February's IPO market.