By Tom Zanki

Law360 (February 26, 2021, 9:57 AM EST ) Businesses that have prospered from stay-at-home mandates are flocking toward initial public offerings hoping their stories still resonate, joined by companies from battered industries that are eyeing recovery in a post-pandemic world, indicating no rest for the hot IPO market.

New filings show several new IPO candidates that reported surging sales in 2020, a year in which many companies that benefited from quarantines and remote work setups went public in droves. The latest prospects appear to be betting that there is more gas in the IPO tank.

Experts note that the strength of the recent debuts, combined with longer-term uncertainty regarding pandemic-related restrictions and markets in general, could be fueling the companies' urgency to seize a window while they have momentum.

"If they had a boom in sales in the pandemic, they are highly incentivized to go public as soon as possible," said Matthew Kennedy, a senior market strategist at IPO-focused research firm Renaissance Capital.

Success could depend upon whether companies can persuade investors that their 2020 prosperity was not an aberration but an indicator of sustainable growth that can endure beyond the pandemic. The coming weeks should provide a clearer picture of how investors respond.

One of the largest IPOs could come from Korean e-commerce giant Coupang Inc., whose revenue nearly doubled in 2020. Seoul-based Coupang's filing indicates it plans to raise at least $1 billion. Health insurer Oscar Health Inc., whose virtual care offerings soared in the pandemic, could price an estimated $1 billion IPO in early March. 

Two companies appealing to the boom in do-it-yourself consumers who have taken up projects since the pandemic — fabric and crafts retailer Joann Inc. and crafting machines maker Cricut Inc. — filed IPOs in February and could launch their marketing roadshows in the coming days.

Pool equipment supplier Hayward Holdings Inc. also filed an IPO last month, noting rising pool sales and homeowner use of outdoor space since the pandemic. Restaurant order and delivery platform Olo Inc. filed an IPO as well, seeking to capitalize on the boom in on-demand commerce.

Food packaging company Karat Packaging Inc., whose products are used in takeout and delivery orders, has revived IPO plans as well after withdrawing a prior filing in 2019.

All seven companies reported varying levels of sales surges in 2020. Most also warned in their securities filings that the pace of last year's increases may not be sustainable.

Even if social restrictions loosen, the companies could benefit if the pandemic induces permanent changes in consumer behavior. Stuart Riemer, managing director and partner at wealth management firm Treasury Partners, said certain stay-at-home trends may "have legs even in a post-COVID-19 vaccine world," namely e-commerce and grocery delivery.

"Also, regarding the shift in urban to suburban, we don't expect these people to immediately return to cities once the pandemic ends," Riemer said. "This may elongate the recent trend of home improvement and do-it-yourself projects related to the home, which are tougher to undertake in cities."

IPO lawyers also note that capital markets can close — as they did for a brief time at the start of the pandemic — as fast as they open, making it urgent for companies to strike while they can.

"Doing so is smart, opportunistic management," Paul Hastings LLP partner Brandon Bortner said. "Windows are always limited. So when a company is in a position to access the public capital markets and give their investors liquidity, they're going to do it if they think it's right."

Unknown variables can also create a sense of urgency for companies. Despite recent declines in coronavirus infections, questions persist about the speed of vaccine rollouts, whether new variants will impede recovery and the pace at which more people can safely return to work.

"Every time somebody considers an IPO, market window is always a conversation," Freshfields Bruckhaus Deringer LLP partner Pamela Marcogliese said. "It's that much trickier this time around with the pandemic and the uncertainty of everything going on."

Among the more-high-profile companies planning to go public with pandemic-related momentum is gaming platform Roblox, which is planning a direct listing rather than a traditional IPO. A direct listing is an IPO alternative that provides shareholders liquidity although it doesn't include the sale of new shares. Roblox, which plans to list its shares on March 10, said in regulatory filings that rapid growth last year was aided by the pandemic as users spent more time online.

Not all companies seeking to capitalize on gains since the pandemic have achieved their desired results. Two mortgage originators, Home Point Capital Inc. and LoanDepot Inc., both slashed their IPO sizes recently and priced at lower valuations than their original targets.

Kennedy noted that investors likely didn't see those companies' recent growth, aided by a booming housing market in 2020, as sustainable given the cyclical nature of mortgage lending. Companies showing more durable growth trajectories, however, may find receptive investors.

"Last year the big question was: 'How is your business performing during the pandemic?,'" Kennedy said. "This year, it's: 'What will your business look like when the economy normalizes?' We're looking for businesses in areas with long-term growth, whose growth prospects during the pandemic were not really a one-time aberration."

On the flip side, some companies in industries slammed during the pandemic are approaching public markets hoping for recovery as people resume travel. Low-cost airline Sun Country Airlines Holdings filed for an IPO on Feb. 8 and can launch marketing plans any day.

Blackstone-backed natural gas producer Vine Energy Inc. also filed IPO plans on Feb. 22 and could go public in March. Fossil-fuel companies struggled in 2020 amid pandemic-related oil price shocks, although natural gas prices have risen in early 2021 on increased demand.

Baker Botts LLP partner Michael Torosian sees converging factors driving business funding. He notes that companies that have adapted well to the pandemic benefit from tailwinds, while certain companies that have been hurt are anticipating some return to "normalcy." Such companies could be experiencing pent-up demand and expect recovery as vaccines roll out.

"There's a real confluence here of companies that have the potential of accessing the capital markets in 2021," Torosian said.

--Editing by Orlando Lorenzo and Alyssa Miller.

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