The IPO Buzz: Easing into November

As the calendar flips to November this week, only two companies are planning to go public. That’s not a surprise. Wall Street hates uncertainty. A slowdown in IPO traffic has been expected ahead of Nov. 8 when Americans will go to the polls to vote after one of the most contentious presidential races on record.

GDS Holdings (GDS – proposed) is expected to trade Wednesday morning and Smart Sand (SND – proposed) is scheduled to trade Friday morning. The two IPOs aim to raise about $425 million – a sharp drop from last week’s calendar of seven IPOs that raised $2.77 billion. (More on GDS and Smart Sands offerings in a minute.)

High Hopes, Harsh Reality

Last week began with high hopes. The IPO stories were there and the pricings were there, but the aftermarket orders were not there. Consider the following: (1) On Thursday, ZTO Express (ZTO), China’s second-largest package delivery company, priced 72.1 million American Depository Shares at $19.50, up from a range of $16.50 to $18.50 each, to raise $1.4 billion. The initial report was that its opening quote was over $21 and then its price started melting away. The IPO opened at $18.40 and closed at $16.57. (2) On Thursday, Myovant Science (MYOV), a biopharmaceutical company developing therapies for endocrine disorders, priced 14.5 million shares at $15 each, up from 13 million shares at $12 to $15 each. The IPO opened at $15 and closed its opening day at $13.26. (3) On Wednesday, Ra Pharmaceuticals (RARX), a developer of small-molecule therapies for rare diseases, priced 7 million shares at $13 each, up from 5.8 million shares at $12 to $14 each. The IPO opened at $14.16 and closed its opening day at $13. (4) By Friday, Acushnet Holdings (GOLF), the sporting goods manufacturer, turned conservative. Its IPO of 19.3 million shares was priced at $17 each, a long way down from 19.3 million shares at $21 to $24 each. That worked. The IPO opened at $17.04 and closed its opening day at $17.95.

Chinese Data and American Frac Sand

That brings us back to this week and its two IPOs – GDS Holdings and Smart Sand.

GDS, based in Shanghai, is a developer and operator of high-performance data centers. The company’s facilities are strategically located in China’s primary economic hubs where demand for high-performance data center services is concentrated. GDS describes itself as “carrier and cloud neutral, which enables our customers to connect to all major PRC telecommunications carriers, and to access a number of the largest PRC cloud service providers, whom we host in our facilities.” 

Smart Sand, based in The Woodlands, Texas, is a pure-play producer of sand for hydraulic fracturing, a process used in drilling oil and gas wells in shale formations. Sand is used in the hydraulic fracturing process (known as “fracking”) to produce petroleum fluids, such as oil, natural gas and natural gas liquids from rock units that lack adequate pore space for these fluids to flow to a well. Most frac sand is a natural material made from high-purity sandstone.

Next week’s IPO calendar has just one deal so far, but that could change when the U.S. Securities and Exchange Commission’s filing window opens on Monday morning.

Stay tuned. 

Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinion.