IPO market faces busy week that includes first cannabis cultivator to list on Nasdaq

A Canadian cannabis company, an oil-and-gas services company, two banks and a smattering of biotechs are among the 10 companies that are expected to complete their initial public offerings this week to mark one of the busiest weeks of the year.

There have been just two other weeks this year with 10 or more deals, according to Kathleen Smith, principal at Renaissance Capital, a provider of institutional research and IPO-themed ETFs. This week’s crop is expected to raise more than $1.1 billion and comes during a period of strong returns, said Smith.

“Returns are the fuel that drives the IPO engine and the IPO index IPO, +0.03% is up about 10% in the year to date,” she said. That compares with a gain of 4.7% for the S&P 500 SPX, -0.05%

“The market has been fairly rational, we’re not seeing any or the activity that we saw in the years leading up to the internet bubble, the pricing is not out of line with the rest of the market,” said Smith. “It’s a sweet spot for the IPO market.”

So far this year, the tech sector has performed best and raised more than $10 billion in capital, she said.

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The largest deal this week is the $300 million IPO of AFG Holdings Inc., the oil services company that will mark a return to the market for that sector. There have been just six energy IPOS in 2018, and they have had a mixed performance with most now trading below their IPO price, said Smith.

Oil prices have rallied 15% in 2018 so far, although they were down Monday with market participants awaiting the outcome of today’s meeting between President Donald Trump and Russian President Vladimir Putin.

AFG AFGL, +0.00% will be followed next week by two other energy deals, the roughly $252 million IPO of Bloom Energy Corp. and a $300 million deal that will bring Berry Petroleum Corp. back to public markets after five years. Berry was acquired by Linn Energy in 2013 for about $4.6 billion. AFG is planning to list on the New York Stock Exchange under the ticker symbol “ AFGL.”

Bloom Energy is a clean-energy unicorn, the Silicon Valley term for a company that has a valuation of at least $1 billion.

Its backers include Sand Hill Road powerhouses Kleiner Perkins Caufield & Byers and New Enterprise Associates. The company has long been on lists of Silicon Valley companies poised to go public, but it backtracked from a confidential IPO filing in 2016.

The Sunnyvale, Calif., company hopes to trade on the New York Stock Exchange under the ticker symbol “BE.”

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In the health-care space, Rubius Therapeutics Inc. is poised to raise about $200 million in its IPO. That company is developing a class of medicines called Red Cell Therapeutics and has designed a proprietary platform to genetically engineer RCTS as ready-to-use cellular therapies to treat rare diseases, cancer and autoimmune diseases.

Rubius will use the proceeds of the IPO to upgrade a manufacturing facility that it intends to purchase, to expand its platform and R&D pipeline and for working capital. The company is planning to list on Nasdaq under the ticker symbol “RUBY.”

Replimune Group Inc. REPL, +0.00% a clinical-stage biotech that specializes in oncolytic immunotherapy, a cancer treatment that exploits the ability of certain viruses to replicate and directly kill tumors, is aiming to raise $100.5 million. The company is planning to list on Nasdaq under the ticker symbol “REPL.”

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Then there’s Tilray Inc., the Canada-based marijuana production and processor that is aiming to raise about $135 million. Tilray is not the first cannabis company to list on the Nasdaq — at least one, Cronos Group Inc. CRON, -4.25% is cross-listed on the Nasdaq and TSXV — Tilray will be the first cannabis cultivator to raise capital via a Nasdaq listing, as MarketWatch’s Max Cherney has reported.

Tilray TLRY, +0.00% is planning to list on Nasdaq under the ticker symbol “TLRY.”

Rounding out the list are two financial deals; Coastal Financial Corp., a holding company for Washington state-based Coastal Community Bank, which focuses on small and medium-size businesses in the Puget Sound region, that is aiming to raise $38 million; and First Western Financial Inc.MYFW, +0.00% a holding company based in Denver, Colorado, that offers wealth management services to clients in 13 locations across Colorado, Arizona, Wyoming and California, that is aiming to raise $37 million.

Coastal Financial is planning to list on Nasdaq, under the ticker symbol “CCB.” First Western is planning to list on Nasdaq under the ticker symbol “MYFW.”

The smallest deal of the week is DERMAdoctor LLC DDOC, +0.00% a Kansas City, Mo.-based cosmetics company that specializes in skin care products. That company is expected to raise about $12 million.

But the company, which is run by a husband and wife team, has a history of financial losses and an independent auditor questioned its ability to continue as a going concern for the next year, according to its prospectus. DERMAdoctor has also had clashes with the Federal Trade Commission for making false or unsubstantiated claims for its products, as MarketWatch’s Emma Court has reported.

DERMAdoctor is planing to list on Nasdaq under the ticker symbol “DDOC.”

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