Corebridge Financial, Inc. (CRBG proposed) tops the IPO marquee this week. The AIG spin-off’s initial public offering – estimated at $1.8 billion – is the biggest deal of the year, exceeding TPG, Inc.’s (TPG) $1 billion IPO in January. Bankers plan to price the Corebridge IPO on Wednesday night (Sept. 14, 2022) – right on schedule. Yes, the deal is still on track despite the rout in the U.S. stock market Tuesday (Sept.13, 2022) on shocking U.S. CPI data.
For anyone who might have slept through the market’s stomach-churning day: Stocks slid – marking their sharpest one-day drop with the Dow down 1,276.37 points – in their worst day since June 11, 2020, according to The Wall Street Journal.
The U.S. Consumer Price Index jumped 8.3 percent in August from the same month a year ago, hovering near a 40-year high even as gasoline prices fell. The overall August CPI also ticked up 0.1 percent from July. The hotter-than-expected CPI data ended investors’ hopes that a cooling of inflation would give the Federal Reserve a reason to take its foot off the rate-increase pedal. Investors now expect the Fed to raise the benchmark interest rate by 75 basis points next week, according to Bloomberg.
J.P. Morgan, Morgan Stanley, Piper Sandler, BofA Securities, Citigroup and Goldman Sachs are the joint book-runners of Corebridge Financial’s initial public offering. More than 30 banks are involved as co-managers.
Corebridge Financial’s stock is expected to start trading Thursday, Sept. 15, 2022, on the New York Stock Exchange.
A Dividend Play
IPO investors kept their cool on Tuesday. They like the Corebridge deal.
“It’s going to pay a dividend and it has strong earnings. What’s not to like?” a seasoned IPO trader says.
Corebridge Financial, AIG’s individual and group retirement and insurance business, plans to pay a quarterly dividend of 23 cents a share, starting in the third quarter. The dividend – annualized at 92 cents a share – will require board approval.
The Houston-based company earned net income of $7.7 billion on revenue of $24.2 billion for the 12 months that ended March 31, 2022, according to the prospectus. Long-term debt outstanding at June 30, 2022, was about $6.89 billion.
Corebridge Financial, known as SAFG Retirement Services before the IPO, managed or administered $388 billion in client assets as of March 31, 2022, the prospectus says.
An IPO veteran says he thinks the Corebridge IPO is “a good deal, a quality deal.” But he’s not sure if it will be hot in a market that’s been knocked down by today’s CPI shock.
It’s All About the Price
The wild card is the price. This is an IPO of 80 million shares – all offered by AIG – at a price range of $21 to $24.
If the Corebridge IPO is priced at $21, the low end of its range, the deal would raise $1.68 billion. That number still ranks Corebridge ahead of TPG, whose IPO started trading on the NASDAQ on Jan. 13, 2022.
For what it’s worth: TPG’s stock closed Tuesday (Sept. 13, 2022) on the NASDAQ at $31.41, up $1.91 – a gain of 6.5 percent – from its $29.50 IPO price.
American International Group (AIG) is selling a relatively small stake in Corebridge in the IPO. After the IPO, AIG will still own 77.7 percent of Corebridge’s outstanding stock and a Blackstone affiliate will still own 9.9 percent.
The spin-off – in the works for about two years – lets AIG streamline its balance sheet.
Comparable stocks in the insurance sector include MetLife Inc. (MET), Prudential Financial Inc. (PRU) and Equitable Holdings Inc. (EQH). All three trade on the NYSE. All three have outperformed the S&P 500 this year. Let’s take a look:
-MetLife Inc. (MET) shares closed Tuesday at $66.47, down $2.05 or off 2.99 percent for the day. On Dec. 31, 2021, MetLife shares closed at $62.49. MetLife’s stock is up 6.37 percent for the year to date.
-Prudential Financial Inc. (PRU) closed Tuesday at $95.79, down $3.97 or off 3.98 percent for the day. On Dec. 31, 2021, Prudential Financial shares closed at $108.24. Prudential Financial’s stock is down 11.5 percent for the year to date.
-Equitable Holdings Inc. (EQH) closed Tuesday at $29.92, down $1.09 or off 3.51 percent for the day. On Dec. 31, 2021, Equitable Holdings shares closed at $32.79. Equitable Holdings’ stock is down 8.75 percent for the year to date.
The S&P 500 is off 17.5 percent in 2022, following Tuesday’s massive sell-off. The Dow is down 14.4 percent this year, while the NASDAQ Composite Index is down 25.6 percent.
A Biotech IPO Ahead
Third Harmonic Bio, Inc. (THRD proposed) is also planning to go public on Wednesday night (Sept. 14, 2022) to trade Thursday on the NASDAQ. This is an IPO of 9.0 million shares at $16 to $18 to raise $153 million.
Morgan Stanley, Jefferies and Cowen are the joint book-runners.
Third Harmonic Bio, Inc., is attracting interest from sector players, as expected.
Based in Cambridge, Massachusetts, Third Harmonic Bio, Inc. is developing a drug to treat chronic hives, under a license agreement with Novartis. The company has no revenues, no collaborations, and a net loss of $29.6 million for the last 12 months.
Bank Deal Priced Below Range
LINKBANCORP Inc. (LNKB) priced its public offering/NASDAQ uplisting on Tuesday night (Sept. 13, 2022) at $7.50 – sharply below the bottom of its range of $8.00 to $9.50 – and sold 4.58 million shares, the same number of shares as in the prospectus. The stock, previously traded on the OTC Pink Market (“the Pink Sheets”), is expected to start trading Wednesday morning on the NASDAQ.
Stephens, Inc. and Piper Sandler were the joint book-runners of the LinkBankCorp deal.
LINKBANCORP is the holding company of a profitable community bank, The Gratz Bank, in Camp Hill, Pennsylvania.
IPO investors like this deal, citing the company’s profits and the offering’s small size.
The prospectus called this deal an IPO, and in almost the next breath, mentioned that the stock has traded on the OTC Pink Market. LINKBANCORP is a NASDAQ uplisting, NOT an IPO.
Rounding Out the Week
Wearable Devices Ltd. (WLDS/ WLDSW) priced its IPO of 3.75 million units at $4.25 on Monday night (Sept. 12, 2022). The number of units was raised to 3.75 million from 3.6 million in the prospectus. The IPO price was reduced sharply from the IPO’s $5.20-to-$7.20 range.
Aegis Capital Corp. was the sole book-runner of the Israeli company’s IPO.
Wearable Devices’ stock opened Tuesday (Sept. 13, 2022) at $4.70, up from its $4.25 IPO price, and hit an intraday high of $5.85 before succumbing to gravity as the stock market’s sell-off accelerated around midday. Wearable Devices’ stock closed at $2.85, down $1.40 for a loss of 32.94 percent from its IPO price. It ended the day as a broken deal.
Based in Israel, Wearable Devices is developing the Mudra, a watchband for the Apple watch, which permits touchless operation of the watch.
A tiny NYSE-American uplisting/public offering by Know Labs (KNW proposed) – 3 million shares at $2.00 – is expected to price Thursday night (Sept. 15, 2022) for trading on Friday (Sept. 16). This $6 million deal, a carryover from last week, was moved back a day at mid-week to land on Thursday night’s pricing roster. Boustead Securities is the sole book-runner.
Know Labs is developing a non-invasive blood glucose monitor.
Nexalin Technology (NXL proposed/ NXLIW proposed) is a tiny unit IPO – 1.5 million units at $6.00 to $7.00 – launched this week and set for pricing on Thursday night. Maxim is the sole book-runner of this medical device company’s micro-cap IPO of stock and warrants. The IPO’s estimated proceeds are $9.75 million, based on mid-point pricing.
Nexalin has developed a Generation-1 (Gen-1) cranial electrotherapy stimulation (CES) device to treat anxiety and insomnia. The FDA classifies the CES device as a Class II medical device.
Waiting for Lichen China
Lichen China Ltd. (LICN proposed) is a small-cap IPO carried over from last week. Some see this IPO getting done on Thursday night (Sept. 15, 2022) to trade Friday, Sept. 16, on the NASDAQ. Others see Lichen China pricing its IPO on Friday to trade Monday, Sept. 19, on the NASDAQ. The IPO, initially set for pricing last Friday night (Sept. 9, 2022) to trade Monday, Sept. 12th, has been delayed, most likely pending a regulatory review.
The word is that this small-cap IPO is highly anticipated. The deal consists of 6.25 million Class A ordinary shares at $4.00. Univest Securities is the sole book-runner.
The issuer of the stock in this IPO is the Cayman Islands-incorporated holding company – and not the Chinese operating company. The operating company has provided tax preparation and other tax solutions services, along with financial services, under the Lichen brand in China for the past 17 years.
Wholesale Inflation Data Ahead
On Wednesday morning at 8:30 a.m. EDT, the U.S. Labor Department will release its Producer Price Index reading for August, which reflects prices paid to suppliers. The PPI increased by 9.8 percent in July from a year ago, the smallest annual increase since October 2021’s gain of 8.9 percent, according to The Wall Street Journal.
Will August PPI deliver another shock?
Note: Never trade on proposed symbols. They have been known to change and you might buy something on the OTC Bulletin Board.
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