The IPOX® Update 3/27/24

Alibaba Cancels Cainiao's $1B+ IPO Amid Market Instability and Strategy Shift

Chinese e-commerce giant Alibaba Group has called off the planned IPO of its logistics arm Cainiao, which was initially valued at over $1 billion. The decision comes as Alibaba shifts its focus to strengthening its core e-commerce business and moves away from standalone unit IPOs amid market instability. Instead, Alibaba will buy the remaining Cainiao shares for $3.75 billion, fully integrating the logistics unit into its primary retail operations. Cainiao, critical to Alibaba's domestic and international logistics, is valued at $10.3 billion in the buyout. Alibaba faces challenges in market share and growth, with its recent 5% revenue increase falling below expectations. As part of its restructuring efforts, the company is also exploring the sale of non-core assets, including its InTime retail operations. The cancellation of Cainiao's IPO and the strategic realignment are cited as responses to current market conditions and the company's long-term goals. (Source)

Chinese ADAS Pioneer Horizon Robotics Files for Hong Kong IPO

Horizon Robotics, a leading Chinese provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions, has filed for an IPO on the Hong Kong Stock Exchange. The company, valued at $8 billion after its latest investment round, aims to use the proceeds to expand its ADAS/AD solutions, invest in R&D, support joint ventures, and bolster marketing and operations. Founded in 2015, Horizon Robotics held a 21.3% market share in China's ADAS solutions market in the previous year, with its products featured in 230 car models across 24 manufacturers, including Li Auto and Geely. In 2022, the company formed a joint venture named "Carizon" with Volkswagen's software unit Cariad. With China's smart car sales projected to reach 29.8 million by 2030, Chinese state media site Yicai Global cites that Horizon Robotics is well-positioned to capitalize on this growth. The company reported revenue of CNY1.6 billion (USD215 million) in 2022, a 71% increase from the previous year, and maintains a gross profit margin of around 70%. (Source)

Norway's $1.6T Sovereign Wealth Fund Criticizes UK's FCA Proposals to Simplify Listing Rules

Norway's sovereign wealth fund, which manages $1.6 trillion in assets, has raised concerns about the UK Financial Conduct Authority's (FCA) proposals to simplify public listing rules, arguing that they could potentially undermine investor protection and market reputation. The FCA's plan aims to consolidate listing requirements in an effort to stimulate London's IPO activity. However, the Norwegian fund contends that reducing corporate governance standards could lead to increased costs for investors. The fund emphasizes the importance of specific protections, such as sunset clauses for dual-class shares and shareholder votes, and supports maintaining current controls on shareholders and annual disclosure requirements. The criticism from one of the world's largest sovereign wealth fund adds to the ongoing debate surrounding the balance between attracting IPOs and ensuring adequate investor safeguards in the UK market. (Source)

Dubai Considers IPO for Construction Firm ALEC Amid Real Estate Boom

The Investment Corporation of Dubai (ICD), the emirate's sovereign wealth fund, is exploring the potential listing of construction firm ALEC amid Dubai's ongoing real estate boom. Although details of the IPO remain uncertain, a successful listing could extend Dubai's recent streak of high-profile state-owned company IPOs. ICD acquired ALEC in 2017 from Al Jaber Group, and the firm is known for its diverse portfolio of construction projects. Dubai's property market is nearing record prices, fueled by foreign investment and policy changes that have made the emirate an attractive destination for businesses and individuals. However, the construction industry in Dubai has historically faced cycles of growth and decline, making the timing of the potential IPO a crucial factor. The consideration of ALEC's IPO reflects the growing interest in Dubai's capital markets and the government's efforts to capitalize on the current real estate boom. (Source)

Carlyle Group Considers $1B IPO for Indian IT Firm Hexaware Technologies

Global investment firm Carlyle Group is weighing an IPO for Indian IT company Hexaware Technologies, which could raise approximately $1 billion. If successful, the IPO could value Hexaware at over $4 billion, potentially making it India's largest since the Life Insurance Corporation listing in 2022. Alternatives to the IPO include a stake sale to another investor or industry peer. Carlyle acquired Hexaware in 2021 from Baring Private Equity Asia, which is now part of EQT AB. Hexaware offers a range of IT services, including outsourcing, cloud, data, and artificial intelligence solutions. Discussions regarding the IPO details are ongoing, and no final decisions have been made yet. The potential listing of Hexaware highlights the growing interest in India's technology sector and the appetite for significant IPOs in the country's capital markets. (Source)

Top Morgan Stanley Banker Declares End of 'Sober' IPO Market

A leading banker at Morgan Stanley has announced that the era of a "sober" IPO market has come to an end, citing the successful public debuts of social media platform Reddit and AI chip company Astera Labs as indicators of a shift towards higher risk tolerance among investors. The bank describes the current environment as a "lean-in market," where investors are more open to investing in emerging business models. The upcoming IPOs of companies such as cashback app Ibotta, cloud data protection firm Rubrik, and healthcare data analytics provider Tempus Labs suggest a more active market that is ready to embrace new listings. The rapid growth of the generative AI sector is also steering investor focus towards the infrastructure that supports AI technologies. The banker's comments reflect a growing optimism in the IPO market and a willingness among investors to back innovative companies across various sectors. (Source)

Cashback and Rewards App Ibotta Files for $100M IPO, Targets Expansion

Ibotta, a leading cashback and rewards app, has filed for a $100 million IPO, aiming to capitalize on its significant revenue growth and profitability in a promising IPO climate. The company has demonstrated strong cash flow and operates in the growing global consumer packaged goods (CPG) digital advertising market, which is expected to exceed $48.5 billion in 2024. Ibotta plans to use the IPO proceeds for general corporate purposes, with a focus on growth and expansion initiatives. The company's decision to go public highlights the increasing interest in technology-driven consumer reward platforms and the potential for such businesses to thrive in the current market environment. As more consumers turn to digital solutions for savings and rewards, Ibotta is well-positioned to benefit from this trend and solidify its position as a leader in the cashback and rewards space. (Source)

HD Hyundai Marine Solution and Shareholder to Raise $553M in Korean IPO

HD Hyundai Marine Solution Co., a subsidiary of South Korean conglomerate HD Hyundai, and a shareholder are planning to raise up to $553 million in an initial public offering on the Korean stock exchange. The company will offer 8.9 million shares, priced between 73,300 won and 83,400 won, targeting a pre-money valuation of up to 3.3 trillion won. The IPO is evenly split, with 50% of the shares offered by the company and 50% by the shareholder. The bookbuilding process is scheduled from April 8-22, with the final pricing set for April 24. HD Hyundai Marine Solution Co. is expected to list on the exchange on May 9. KB Securities, JPMorgan, and UBS are serving as joint global coordinators for the IPO. The company's decision to go public reflects the growing interest in the marine solutions sector and the potential for significant capital raising in the Korean market. (Source)

Global IPO Activity Lags Behind Surging Equity Share Sales in Q1 2024

Equity share sales in the first quarter of 2024 have reached their highest level since 2021, totaling $143.9 billion, while IPO volumes remain flat compared to the same period last year at $22.4 billion. The successful debuts of social media platform Reddit and AI chip company Astera Labs on the NYSE have contributed to the rallying markets. In Europe, Swiss skincare group Galderma completed the largest IPO since German luxury car maker Porsche in September 2022. However, the disappointing performance of German perfume retailer Douglas on its debut highlights the challenges faced by mid-cap IPOs. Looking ahead, buyout firm CVC Capital and Italian luxury brand Golden Goose are preparing to go public as early as the second quarter. Additionally, a further share sale is expected in Saudi oil giant Aramco to boost the diversification of the Saudi economy. (Source)

Successful Reddit and Astera Labs IPOs Spark Bubble Concerns, but DataTrek Sees Proper Market Functioning

The recent successful IPOs of U.S. social media platform Reddit and AI chip firm Astera Labs have raised concerns about a potential market bubble. However, research firm DataTrek argues that the IPO resurgence simply indicates that capital markets are functioning properly after a prolonged slowdown. With just 38 IPOs in 2022 and 54 in 2023, the fewest since the financial crisis, 2024 has already seen 30 IPOs. While Reddit and Astera Labs' first-day gains of 50-70% far exceed the historical mean of 19% and echo the 71% average seen in 1999, the current pace of 120 IPOs in 2024 remains well below the bubble-era levels of 476 in 1999 and 311 in 2021. Successful IPOs span various sectors, including app platform AppLovin, semiconductor firm Arm, sneaker company On Holding, water infrastructure provider Core & Main, and appliance maker SharkNinja. (Source)

Italian Gas Supplier 2i Rete Gas Aims to Raise €600M in Milan IPO

Italian gas supplier 2i Rete Gas plans to raise €600 million in an IPO on the Milan Stock Exchange, listing at least 30% of the company. The IPO could value the company at up to €5 billion, including debt, although plans are still in the early stages and subject to change. 2i Rete Gas is controlled by Italian infrastructure fund F2i (64%), with Dutch pension fund APG and French private equity firm Ardian holding the remainder. Leading banks BNP Paribas, Goldman Sachs, Intesa Sanpaolo, Mediobanca, and UniCredit have been selected to execute the IPO. The company competes with Italian gas distributor Italgas and reported €731.6 million in revenue and €502.5 million in core earnings in 2022. The planned IPO is part of a hopeful trend for Europe's IPO market recovery, alongside companies like German perfume retailer Douglas and Swiss skincare group Galderma. (Source)

Israeli Cybersecurity Firm Cato Networks Plans $500M+ New York IPO by Early 2025

Israeli cybersecurity company Cato Networks is planning to go public on the New York Stock Exchange by early 2025, aiming to raise over $500 million. Leading investment banks Goldman Sachs, JPMorgan Chase, and Barclays have been hired as underwriters for the IPO. Cato Networks was valued at over $3 billion in its last private funding round and has raised more than $770 million since its founding in 2015. The company reported a 59% increase in annual revenue in 2023 and serves over 2,200 enterprise customers. Cato Networks' decision to go public is part of a broader trend of IPO market revival, with companies like U.S. social media platform Reddit going public. (Source)

Technology Services Firm Synechron Files Confidentially for $400M+ IPO in 2024

U.S. technology and consulting services firm Synechron has confidentially filed for an initial public offering slated for 2024. Leading investment banks Goldman Sachs and JPMorgan Chase are spearheading the IPO process. Synechron aims to raise around $400 million or more in the offering, targeting a valuation of approximately $3 billion. The company's IPO details are expected to be made public in the upcoming weeks. Both Synechron and Goldman Sachs have declined to comment on the report, while JPMorgan Chase has also refrained from commenting on the IPO filing. The confidential filing allows Synechron to keep its financial information private until closer to the actual IPO date, a common practice among companies preparing to go public. (Source)

Middle East Hypermarket Giant LuLu Group Plans Major Abu Dhabi IPO

Middle East hypermarket giant LuLu Group International, founded by Indian-born businessman Yusuff Ali, is planning a major initial public offering in Abu Dhabi. The company has appointed Abu Dhabi Commercial Bank, Citigroup, Emirates NBD Capital, and HSBC as lead bankers for the IPO. LuLu aims to raise up to $2 billion, although final decisions on timing and valuation have not yet been made. The company is also considering a dual listing in Riyadh, with a potential second-half listing this year. LuLu's valuation exceeded $5 billion in 2020 after a significant investment from an undisclosed party. With a workforce of over 70,000 across 26 countries, LuLu operates hypermarkets, supermarkets, and other retail outlets. The company's competitor, Dubai-based Spinneys Dubai LLC, is also eyeing a Dubai IPO this year. (Source)

Abu Dhabi's IHC to List $27B+ Holding Firm 2PointZero in 2025

International Holding Company (IHC), an Abu Dhabi-based conglomerate, plans to list its holding firm 2PointZero, valued at over $27 billion, in 2025. 2PointZero consolidates companies from the Royal Group, spanning sectors from financial services to mining. Key companies under the 2PointZero umbrella include Lunate, International Resources Holding, and Chimera. The listing aims to inject capital and foster growth, with Sheikh Tahnoon bin Zayed Al Nahyan, the UAE's national security adviser, chairing the company. IHC also plans to list International Technology Holding this year and Sirius International Holding in 2025. The conglomerate's focus in 2024 is on internal business growth in existing sectors, including investments in artificial intelligence and mining. International Resources Holding will specifically focus on mining investments in copper, cobalt, and other minerals. (Source)

Algeria's Stock Market Value Soars Sevenfold After Historic Credit Populaire d'Algerie IPO

The Algiers Stock Exchange has seen a remarkable boost in its market capitalization, nearing $4 billion, following the historic IPO of state-owned bank Credit Populaire d'Algerie (CPA). The IPO, which raised $833 million, has become the exchange's largest in its 30-year history, increasing the bourse's market cap from 72 billion dinars to 532 billion dinars. The successful sale marks a significant step in Algeria's ongoing financial system reform efforts. The government plans to follow up with another IPO for Banque de Developpement Local in 2024. Retail investors purchased nearly 70% of the 49 million CPA shares offered at 2,300 dinars each, despite the bank having to reduce its offering size from the initial 60 million shares due to weak demand. The IPO's success is expected to pave the way for further listings and attract more domestic and international investors to the Algerian stock market. (Source)