Tech unicorns rushing to go public in US

NEW YORK • Forget merger Monday. The start to this week instead saw a flurry of companies file to go public as unicorns gallop to market, waking up what is usually a sleepy end to the US summer season.

Five companies joined the rush: Unity Software, Sumo Logic, Jfrog, Snowflake and, filing for a direct listing instead of a traditional initial public offering (IPO), Asana.

All of them filed with the US Securities and Exchange Commission, revealing their financial results for the first time.

Also filing on Monday were financial adviser StepStone Group and at least four biomedical companies, a telemedicine provider and four blank-cheque companies, one of them led by Mr Paul Ryan, the Wisconsin Republican who was Speaker of the House.

A blank-cheque company is a developmental stage company that has no established business plan. It may be used to gather funds as a start-up or, more likely, it has the intent to merge or acquire another business entity.

While investors and deal-makers have traditionally associated Monday with acquisition announcements, the volume of those deals has sunk this year with travel restricted because of the coronavirus pandemic and financiers wary of new situations.

Equity issuance, on the other hand, has sprung back from an initial pandemic-induced lull with a vengeance, with special purpose acquisition companies, or Spacs, leading the charge. Last month, with almost US$19 billion (S$26 billion) in new listings, was the busiest month for US IPOs since September 2014, when 36 companies went public raising US$33 billion, according to data complied by Bloomberg.

IPO volume, including Spacs, in usually languid August topped US$16 billion as of Monday, the data shows. The three highest summer months on record were June, last month and this month.

Software companies have been a small yet lucrative segment for US IPO investors. This year, 18 of them have gone public raising a combined US$5.5 billion. They were up 91 per cent from their offer prices through Monday, based on a weighted average, compared with the 53 per cent increase for the 125 listings overall, excluding Spacs.

"Investors are seeking to deploy capital where there is a high rate of growth and a durability to that growth," said Morgan Stanley's co-head of technology equity capital markets for the Americas Ashley MacNeill. "This is the busiest summer, bar none."

Asana filed for what could be this year's first direct listing. The alternative route to a listing offers companies a way to go public without issuing new shares to raise capital, while usually providing investors a chance to sell their holdings without waiting for a lock-up period to expire.

Asana is the first company to file for a direct listing since Slack Technologies used it last year. Palantir Technologies, which said it is planning a slightly modified version of a direct listing, may be close behind.

Executive Network Partnering, with Mr Ryan as chairman, seeks to raise US$300 million in a listing.

Almost two in five IPOs this year has been a Spac, Bloomberg's data shows, making the once uncommon listings a driving force in mergers and acquisitions.

Monday's biggest deal was the acquisition of driverless car start-up Luminar Technologies, backed by tech billionaire Peter Thiel. Luminar announced on Monday morning that it was going public via a merger with Mr Alec Gores' blank-cheque firm Gores Metropoulos. Mr Thiel is also a co-founder of Palantir.

In all, 112 companies have announced listings on US exchanges this year that are currently pending, according to the data compiled by Bloomberg. They include companies such as Corsair Gaming and Chinese electric-vehicle maker XPeng.

BLOOMBERG