The IPOX® Week

IPOX® PORTFOLIO HOLDINGS IN FOCUS: News on breakthrough treatments for diabetes and Alzheimer’s drove select health care exposure to the top of the Q3 IPOX® Performance Rankings with Gene editing firm Verve Therapeutics (VERV US: +124.80%) and autoimmune disease specialist Prometheus Biosciences (RXDX US: +109.03%) leading the way in the IPOX® 100 U.S. Index (ETF: FPX). Amid Europe’s ongoing energy crisis, low-carbon firms such as EV charging firm Kempower (KEMPOWER FF: +51.41%) and battery solutions provider Stem (STEM US: +86.31%) surged along Norwegian oil shipping firm Hafnia (HAFNI NO: +41.86%) and uranium firm Yellow Cake (YCA LN: +51.41%). Declining commodity prices pressured select energy firms, including Profrac (PFHC US: -17.10%), Highpeak Energy (HPK US: -15.37%) and Saudi Aramco (ARAMCO AB: -6.84%). We also noted the underperformance of tech firms such as video conferencing software Zoom (ZM US: -31.84%), dating app Bumble (BMBL US: -23.66%) and remote access software TeamViewer (TMV GR: -15.77%).

GLOBAL IPO DEAL FLOW REVIEW AND OUTLOOK: 65 sizable companies commenced trading during Q3, raising ca. $24b in total. Based on the difference between the final offer price and Friday’s close, the average IPO gained +11.16%. Volkswagen’s luxury car brand spin-off Porsche (P911 GR: -0.02%) raised $8 billion in Germany’s largest IPO since 1996. Other significant deals in Europe included the IPO of GSK Consumer Healthcare spin-off Haleon (HLN LN: -15.37%), which launched at a $34b valuation. In Hong Kong, duty free retailer China Tourism Group (1880 HK: +24.87%) raised $2.3b and stood out as largest deal and one of the very few H.K. IPOs that recorded gains during last quarter, as other IPOs declined, including lithium miner Tianqi Lithium (9696 HK: -16.46%, $1.7b offer) and EV firm Leapmotor (9863 HK: -48.33%, $800m offer). Across the MENA region, IPOs of Domino’s Pizza operator Alamar Foods (ALAMAR AB: +17.39%, $326m offer) and toll road operator Salik (SALIK UH: +10.00%, $1b offer) performed best, while business park operator TECOM (TECOM UH: -14.61%, $454m offer) fell. In the U.S., the largest deal belonged to the $1.68b IPO of AIG life insurance spin-off Corebridge Financial (CRBG US: -6.86%). Here, we also note the increasing number of (and massively volatile China-linked) micro-cap IPOs, such as AMTD Digital (HKD US: +10156%, $7.8m offer). Strongly anticipated firms set to come to market during Q4 include grocery app Instacart, Intel AI spin-off Mobileye and Softbank’s chip maker Arm.

THE IPOX® SPAC (SPAC) The Index, currently composed of a select list of 50 high conviction plays trading at both the pre- and post-consummation stage, rose +4.36% in Q3 to -21.02% YTD, beating the S&P 500 (SPX) by a massive +937 bps during Q2 and +296 bps YTD to top the Q3 IPOX® Performance Rankings. Top/bottom performers in the portfolio included workforce lodging provider Target Hospitality (TH US: +121.02% QTD) which soared on continuous stellar earnings, whereas lithium battery maker Li-Cycle (LICY US: -22.67%) declined sharply. Regulatory overhang and market volatility pressured SPAC activity with only 8 new SPACs launching in the U.S. during Q3, raising less than $650mln in proceeds in total, while de-SPACs also struggled to stabilize with many companies collapsing to penny-stock status. A total of 48 SPACs announced Merger Agreement in Q3 with Avalon Acquisition (AVAC US: +0.60% QTD) and Dallas-based financial services company The Beneficient Company Group being the largest deals for an enterprise value of $3.5b. 26 SPACS Approved and Completed Business Combination include high-profile CC Neuberger Principal II with images marketplace Getty Images (GETY US: -32.03%) which skyrocketed to a +278.80% gain before recording big declines on concern over stock overhang. Conservative video platform Rumble (RUM US: +22.87%) which merged with Cantor Fitzgerald flagship SPAC CF Acquisition VI rose despite generally negative sentiment for deSPACs. 21 SPACs opted to liquidate as firms failed to identify and combine within the target timeframe, including Chamath Palihapitiya’s flagship SPACs Social Capital Hedosophia IV (IPOD US, $10.01) and Social Capital Hedosophia VI (IPOF US, $10.01) and hedge fund manager Bill Ackman’s Pershing Square Tontine (PSTH US, $20.05), once the largest SPAC in history. Amid the market volatility, 19 SPACs terminated Business Combination, including Cohn Robbins Holdings (CRHC US: +0.00%) QTD) and lottery operator Allwyn Entertainment for its agreed $9.3b deal.