The local IPO market remained strong in the typically slow third quarter, according to data released last week by Ernst & Young.
Three L.A.-area companies went public during the time frame: RBB Bancorp of downtown, which raised $86 million; Sienna Biopharmaceuticals Inc. of Westlake Village, which pulled in $75 million; and YogaWorks Inc. of Culver City, which folded up $40 million.
The deals are part of a huge year globally for IPOs, with 2017 numbers projected to hit close to $200 billion raised, according to Ernst & Young.
“Globally, the market is trending up and on course to have its best year since 2007,” said Scott Porter, a partner at Ernst & Young.
The Western U.S. has done its share to help the IPO market put up strong numbers. Buoyed by Snap Inc.’s $3.9 billion initial offering in March, the region has already outpaced by some 45 percent 2016’s total-year dollars raised with a full quarter to go. It’s also projected to outpace last year in deal volume by the end of 2017, although the 25 year-to-date IPOs in the west trail 2016’s 30 initial offerings.
The strong IPO numbers this year belie some trepidation among companies looking to go public, according to Porter.
“The geopolitical climate is holding some companies back,” he said. “Also, the cost of compliance for public companies as a result of Sarbanes-Oxley and increased regulatory scrutiny remains a consideration.”
There’s also the allure of nonpublic capital markets, which can offer money without the headache of going through a full-blown IPO. Private equity firms also are sitting on a record amount of money, which has to be deployed somewhere.
“There’s a lot of capital out there,” Porter said. “And a lot of companies are choosing to access private money.”
A look at some L.A. companies who recently went public offers clues on why it can be a tough proposition. Pre-IPO market darling Snap’s stock closed at $14.45 on Sept. 28, down almost 40 percent since it opened at $24 on March 2.
YogaWorks, which priced its public offering Aug. 11 at $5.50 a share, experienced an even steeper decline, losing nearly half its value over the course of seven weeks. The company’s stock price was $2.83 at market close Sept. 28.
Real Dollars in VR
There’s been plenty of discussion recently about whether virtual reality or augmented reality is the smarter investment play, with many coming down on the side of the latter technology.
But, at least for a week, virtual was back en vogue with two L.A.-area companies closing deals.
Santa Monica’s Dreamscape Immersive raised $20 million from movie theater giant AMC Entertainment Holdings Inc. in a Series B round. Half of the money will be used to build out six virtual reality centers at theaters in North America and the United Kingdom, including one at the newly renovated Westfield Century City Mall. AMC said it would invest an additional $10 million to develop content.
Dreamscape Chief Executive Bruce Vaughn said in a statement that his company is excited to work with the theater chain.
“We look forward to working with AMC to offer audiences the opportunity to actually step into and experience imaginative worlds previously only available through watching movies,” Vaughn said.
Dreamscape’s big haul was followed by a $4 million Series A funding announcement from Tripp Inc., another virtual reality company that claims to use the tech to alter moods. The round was led by Menlo Park-based Mayfield partner Tim Chang.
Tripp is led by founder and Chief Executive Nanea Reeves, who said in an open letter that the company would create an immersive experience.
“We are focused on using VR for stimulation rather than simulation,” Reeves said. “Taking a TRIPP will not be like anything that exists in the real world.”
Music Money
BMG Production Music acquired Santa Monica independent production house Immediate Music, the companies announced last week.
The deal gives BMG a stronger foothold in the movie trailer soundtrack business. Composers and producers Yoav Goran and Jeffrey Fayman co-founded Immediate in 1993, producing original music for motion picture advertising, trailers, commercials and television programs. Recent Immediate trailer campaigns include “Wonder Woman,” “War for the Planet of the Apes” and “Star Wars: Rogue One.”
Fayman said that he and Goran’s dream has been to better direct and expose their cinematic music to a worldwide audience.
“BMG Production Music is highly focused with an expansive global reach,” he said.
BMGPM’s Berlin-based parent company, Bertelsmann Music Group, has a significant presence in Los Angeles, with offices on the Miracle Mile. BMG serves the film, broadcast, games and advertising industries.
