The IPO Buzz: An IPO Duo in a Somber Week

This week’s IPO calendar opens Monday evening with the pricing of a “blank check” offering, which is expected to start trading Tuesday morning. The week’s IPO run ends on Thursday evening with the pricing of a small-cap offering, which is expected to start trading Friday morning. Between the two dates is Yom Kippur, the most solemn day on the Jewish calendar, and that closes down the IPO market.

Now a word on “blank check” offerings: A “blank check” IPO is also known as a special-purpose acquisition company or SPAC for short. The IPOs are recently formed shell companies that have no operations, but intend to merge with or acquire another company. Basically, the proceeds from the IPO are put in escrow for a period of 18 months and the funds are invested in interest- bearing instruments. (Check the terms of the “blank check” IPO’s prospectus for details.)

If the promoters find a company to merge with or acquire, the shareholders are given the option of accepting the deal or redeeming their shares at issue price plus accrued interest. On the other hand, if the promoters find nothing after 18 months, shareholders get their investment back plus accrued interest.

A caveat: Don’t look for an opening-day moonshot from a “blank check” IPO. That doesn’t happen.

For the year to date, the 2015 calendar has produced 16 “blank check” IPOs, according to the U.S. Securities and Exchange Commission filings. Ten of the 16 deals opened unchanged or up just 1 cent from their IPO prices.

Boulevard of Dreams

Some people think that Hollywood’s Sunset Boulevard is the boulevard of dreams. In the world of IPOs, that honor goes to Wall Street.

The sharpest opening price gain this year for a “blank check” IPO was Pace Holdings Corp. (PACEU). Bankers priced 40 million units at $10 each. Its opening price was $10.10 per unit. (Note: Most “blank check” IPOs are offered as stock plus warrants, but again, check the prospectus.)

In 2014, the calendar produced 12 “blank check” IPOs. Six of the 10 deals opened unchanged or up just 1 cent (yes, up a penny!) from their IPO prices.

There were, however, two losers among 2014’s dozen “blank check” IPOs. The poorest opening price for a “blank check” deal in 2014 was AR Capital Acquisition (AUMAU) Bankers priced 24 million units at $10 each. It opening trade was at $9.66.

The sharpest opening price gain in 2014 for a “blank check” IPO was Boulevard Acquisition (*). Bankers priced 17.5 million units at $10 each. Its opening price was $10.50 per unit.

(*) Note: On Aug. 3, 2015, Boulevard Acquisition announced that it completed the acquisition of AgroFresh, the post-harvest specialty chemical business of The Dow Chemical Company. With the closing of this transaction, AgroFresh became a wholly owned subsidiary of Boulevard Acquisition and Boulevard has been renamed AgroFresh Solutions (AGFS).)

Now back to this week and its IPO traffic.

Boulevard Acquisition II (BLVDU – proposed) is the “blank check” IPO on this week’s calendar.

Bankers expect to offer 35 million units at $10 each. Each unit consists of one share of Class A common stock and one-half of one warrant.

Learning in a Whole New Light

The other IPO set this week is a company that gives teachers and training professionals new interactive tools that use visual images, computer graphics and interactive curricula.  

Boxlight (BOXL – proposed), based in Lawrenceville, Georgia, designs, produces and distributes interactive projectors as well as interactive LED panels in 70-inch HD and 84-inch 4k formats, according to its prospectus. Boxlight sells an expanding product line of projectors interactive LED flat panels, display devices and audio solutions as well as mobile carts and stands to the education and learning technology markets, the prospectus says.

Bankers expect to offer 1,111,111 shares of Class A common stock and Warrants to purchase 555,555 Class A common stock at $8 to $10 per unit to raise $10 million. Each unit consists of one share of Class A common stock and one-half of one warrant.

 At press time, there were only two IPOs on next week’s calendar, but it is early – and anything can happen.

Stay tuned.

Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinions.