IPOs Shield Traders From Brunt of Trade War Bloodbath: ECM Watch
Drew Singer, Gregory Calderone and Crystal Kim, Bloomberg
The market’s worst stretch of 2019 is creating odd bedfellows in the IPO market, where recent debuts are dodging much of the broader sell-off.
Investors seeking shelter from the U.S.-China trade war are finding protection in recent listings, an uncommon trade during downturns. Many recent IPOs lack significant exposure to the negative impact of the trade war, especially when compared to more mature peers.IPOs conducted over the past month have fallen just 2.6% on average since July 31, according to data compiled by Bloomberg, nearly half of the S&P 500’s decline over the same period. The First Trust U.S. Equity Opportunities ETF, which tracks recent debuts, outperformed during both Wednesday’s volatile session and throughout the market’s week-long slide.
While it’s not unheard of for one or two hot IPOs to surge amid a broad decline in stocks, the outperformance across most deals suggests a bigger trend is underway. More consistent outperformance could help bankers advance IPO plans despite volatility that would typically derail most deals.
Chinese-based issuers flooded U.S. exchanges this summer, viewing U.S. investors as more tolerant of traderelated price swings.
Match, Angi Secondaries May Follow IAC Distribution
Massive secondary offerings in Match Group Inc. and ANGI Homeservices Inc. look increasingly possible after IAC/InterActive Corp. announced plans to explore the possibility of distributing its interests in both firms to shareholders.
As of June 30, IAC owned 226.1 million shares of Match Group and 421.5 million shares of Angi. Approximately 19.7 million Match Group shares are short — 9.6 million shares for Angi — according to financial analytics firm S3 Partners. The high short interest is driven in large part by holders of IAC attempting to hedge the media conglomerate’s exposure to these subsidiaries.
Snap Lags After Upsizing Convert Offering
Snap Inc.’s $1.1 billion upsized convertible offering didn’t give shares the same boost as other big equity-linked deals, perhaps owing to tougher market conditions.
Shares fell 2.3% on Wednesday after the offering priced, while rivals Facebook Inc. and Twitter Inc. both rose.
This year’s biggest convertible offerings besides Snap — Tesla Inc. and Fortive Corp — received warmer receptions after they priced. Both stocks rose on the news.
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