McAfee, Ant Group on Tap to Go Public as IPO Market Awaits Presidential Election

The highflying IPO market is gearing up for another push before the sector takes a break ahead of the presidential election, bankers familiar with several companies’ plans told Barron’s. Expect another round of companies to go public in October, while a late year surge could hit problems if the results […]

The highflying IPO market is gearing up for another push before the sector takes a break ahead of the presidential election, bankers familiar with several companies’ plans told Barron’s. Expect another round of companies to go public in October, while a late year surge could hit problems if the results of the presidential election are contested.

As of Oct. 2, 272 companies, including special purpose acquisition companies, or SPACs, have gone public, collecting $103.5 billion, Dealogic said. (The research firm does not include direct listings in its IPO totals.) For comparison, 157 new issues collected $53.16 billion over the same period in 2019. “2020 is on track to be one of the most active IPO markets in 20 years,” Kathleen Smith, a principal with Renaissance Capital, told Barron’s.

Security-software firm McAfee and Ant Group, the payments affiliate of

Alibaba Group

(ticker: BABA), are seen launching their deals later in October, according to Smith, while DoorDash, and Poshmark are also anticipated to go public later this year.

Airbnb, the home sharing platform, is expected to trade in December, a person familiar with the situation said. Marqeta, a card issuing platform, and AvidXchange, which offers accounts payable automation software, are also anticipated to IPO but that likely won’t come until the first quarter of next year, bankers said.

One company that likely won’t be going public this year is Robinhood. The popular stock trading app does not have any plans for an initial public offering later in 2020, a person familiar said.

IPOs have delivered some of the biggest gains this year. Several deals, including

Lemonade

(LMND),

ZoomInfo

(ZI) and

nCino

(NCNO), saw their shares more than double during their debuts and continue to rocket higher since. Lemonade is up 86% from its $29 IPO price, while ZoomInfo has zoomed 109% and nCino has jumped 144%. The year’s best-performing IPO is e-commorce software company

BigCommerce

(BIGC), which went public in August at $24 a share. The stock closed Monday at $92.39, up 285% since its market debut.

“When you have an asset class that continues to perform and deliver for investors, enthusiasm for that group of companies tends to be higher,” said Sumit Mukherjee, head of health care equity capital markets at

Bank of America.

“Success begets success.”

The results are a stunning rebound for the IPO market that went on pause from three months due to the Covid-19 pandemic. A surging stock market helped IPOs roar back after Memorial Day. Since June, roughly 211 IPOs have launched, collecting $85.8 billion. This represents 83% of the $103.5 billion raised by new issues this year.

One of the biggest stories of the IPO market is the success of SPACs. Derided by critics, blank check companies have produced the most IPOs of any sector with 130 listings raising $50.3 billion as of Oct. 2, Dealogic said. The biggest IPO—not including Palantir or Asana, which are direct listings—came from

Pershing Square Tontine Holdings

(PTK.U), the $4 billion SPAC from Bill Ackman.

Many companies now view SPACs as a legitimate way to get to market quickly and with certainty, said Jason Osborn, a partner with law firm Winston & Strawn. Blank check companies are so popular that “targets are now calling us looking for SPACs to do deals with,” Osborn said.

Another theme of this year’s IPO market is the boom in biotechnology. Fifty-four biotechs have gone public this year, valued at $14.4 billion total. The sector generated the year’s third-biggest deal when Royalty Pharma (RPRX) went public in June, raising $2.5 billion. The advent of Covid-19 has “reinforced the need to invest in innovation and healthcare,” said Mukherjee.

The pandemic also highlighted the importance of virtual care and telemedicine. That has helped companies like

Accolade

(ACCD), a health benefits platform, surge 35% in July.

Oak Street Health

(OSH), which offers primary-care centers and telehealth services for seniors on Medicare, soared nearly 90% in its first day in August, and

1Life Healthcare

(ONEM), which offers a primary care platform, gained nearly 60% with its January IPO.

The presidential election could put a damper on the IPO party. The pace of new issues is expected to slow as the presidential election nears. There is typically a period after Thanksgiving and before the Christmas holidays when companies launch IPOs. This year’s presidential election has some unsure whether a late-year IPO surge may happen.

A quick resolution to the presidential election likely means companies have the certainty they need to go public. If the election is contested, or if there are problems, this may cause uncertainty, a stumbling block for new issues. “It totally depends on what happens with the election,” one banker told Barron’s.

Write to Luisa Beltran at [email protected]

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