The IPO Buzz: NuBank Prices at High End, HashiCorp Prices Above Range

The “highs” have it. Brazilian digital banking company Nu Holdings (NU) – known as NuBank – priced its IPO on Wednesday night (Dec. 8, 2021) at $9 – the top of its $8-to-$9 range. HashiCorp (HCP), an American cloud software company, priced its long-awaited IPO at $80 – $8 above the top of its $68-to-$72 range. HashiCorp – dubbed “the deal of the week” – opened at $81.16 on Thursday on the NASDAQ – up 1.5 percent from its IPO price. HashiCorp jumped to $89 around noon EST; HashiCorp closed Thursday at $85.19 – up 6.49 percent on its first day of trading. In contrast, NuBank had to overcome some economic and political cross-currents on the road to going public. Nu Holdings popped up to open at $11.25 on the NYSE at 1:07 p.m. EST – up 25 percent from its IPO price. NU hit an intraday high above $12 before retracing its gains to trade at around $10.60 at around 1:26 p.m. EST. Nu Holdings’ stock closed Thursday at $10.33 – up 14.78 percent in its NYSE debut. (This column, initially published Tuesday, was updated again Friday morning with the Thursday closing prices of HashiCorp’s debut on the NASDAQ and Nu Holdings’ debut on the NYSE.)

Nu Holdings sold 289.15 million shares at $9 each to raise $2.6 billion. All eyes will be on NU on Thursday when it starts trading on the New York Stock Exchange. The high-end pricing gave Nu Holdings a market valuation of $41 billion. Nu Holdings is the parent of NuBank, a digital bank, and Nu Invest, an online broker-dealer. The company serves customers in Brazil, Colombia and Mexico. Nu Holdings is not profitable.

The IPO’s fans said they intended to play this deal because Warren Buffett is backing NuBank’s parent. His company, Berkshire Hathaway, invested $500 million in Nu Holdings in June.

“Warren Buffett is in this one – and so am I,” a veteran IPO trader said.

Bloomberg reported that Berkshire bought 10 percent of the stock in the IPO, according to a person who was familiar with the matter.

Morgan Stanley, Goldman Sachs, Citigroup, Nu Invest, Allen & Co., HSBC and UBS Investment Bank were the joint book-runners of the Nu Holdings IPO.

The Brazilian banking company’s path to going public was not entirely smooth. Nu Holdings cut the IPO’s price range last week to $8 to $9, down from $10 to $11 initially, in an F-1/A filing dated Nov. 30, 2021. The reduction in the price range followed the U.S. stock market’s slide on Black Friday (Nov. 26, 2021) on fears related to the omicron variant of COVID-19.

The IPO’s critics cited concerns about Brazil’s economy and its political outlook as reasons why they wouldn’t participate in the deal. Scores of Brazilian IPOs were shelved this year, according to Bloomberg.

Hungry for HashiCorp

The demand for HashiCorp’s IPO was described as “crazy” the day before the deal was priced. Confirmation came with the news Wednesday night that HashiCorp (HCP) had priced its IPO at $80 – well above the top of its $68-to-$72 price range – on 15.3 million shares. HashiCorp’s market valuation is $14.3 billion, based on that $80 IPO price.

Morgan Stanley, Goldman Sachs, J.P. Morgan, BofA Securities and Citigroup were the joint book-runners. The bankers used a hybrid auction process (direct portal order-entry system) on this deal.

HashiCorp, named after its co-founder Mitchell Hashimoto, attracted plenty of buzz. Wall Street likes the company’s ability to convert the users of its free open-source business software to subscribers to its proprietary software and services. But the company is not profitable.

Some IPO investors had said they wouldn’t play the HashiCorp deal because the price range was too high.  They also pointed to the poor performance of most of this year’s tech IPOs. CNBC reported Tuesday that most of this year’s tech IPOs are in a bear market, down 20 percent or more from their IPO prices. (See: Tech IPOs a bad bet in 2021: All but one in bear market territory ( )

Tech stocks led the U.S. stock market’s rally on Tuesday on the belief that the omicron variant of COVID-19 won’t stop economic growth. The strong comeback by tech stocks gave HashiCorp more wind at its back ahead of the books closing on Tuesday at 4 p.m. EST. The Nasdaq had its best day since March.

Cannabas REIT Up 3 Percent in Debut

Cannabis REIT Chicago Atlantic Real Estate Finance Inc. (REFI) priced its IPO Tuesday night (Dec. 7, 2021) at $16 – the bottom of its $16-to-$18 price range – on just 6.25 million shares. REFI started trading on the NASDAQ on Wednesday, opening at $16.40 and closing at $16.49 – up 3.1 percent from its IPO price. The cannabis REIT is the first IPO of December. The month is off to a slow start with only three sizable deals on this week’s IPO Calendar. Besides REFI, the IPO Calendar includes HashiCorp (HCP proposed), a cloud software IPO dubbed “the deal of the week,” and Brazilian digital banking company Nu Holdings (NU proposed), a dual listing in the U.S. and Brazil.

IPO investors are cautious after some recent disappointments and the U.S. stock market’s slide on Nov. 26th – the Dow’s worst Black Friday ever, according to The Wall Street Journal.

JMP Securities LLC, Compass Point Research & Trading, LLC and Oppenheimer & Co. Inc. were the joint book-runners for the Chicago Atlantic Real Estate Finance deal. Lake Street Capital Markets LLC and East West Markets, LLC acted as co-managers for the IPO.

Chicago Atlantic Real Estate Finance intends to provide mortgages and alternative financing to state-licensed cannabis businesses.

A small-cap biopharma company, Cingulate Inc. (CING), also priced its IPO – a unit offering – on Tuesday night: 4.17 million shares – 600,000 more shares than in the prospectus – and warrants to buy 4.17 million shares – at $6, the low end of its $6-to-$8 price range. The IPO raised $25.02 million. Aegis Capital and Laidlaw & Co. (UK) Ltd. were the joint book-runners.

Shares of Cingulate opened Wednesday on the NASDAQ at $5 – $1 below the $6 IPO price – and then slid to $4.20 at around 11:47 a.m. EST – representing a broken deal on the IPO’s opening day of trading. Cingulate’s shares closed at $4.45, down 25.7 percent from their IPO price.

Cingulate is developing a proprietary timed release delivery system to deliver two stimulant drugs to treat ADHD (Attention Deficit Hyperactivity Disorder).

SPACs in the Spotlight

Eight SPAC IPOs were priced Thursday night. Bankers raised $1.45 billion.

Seven SPAC IPOs were priced Wednesday night, with bankers raising $1.26 billion. The newly public SPACs included Integrated Wellness Acquisition Corp. (WEL.U). (For more info, please see the IPO Calendar.)

Four of the five SPACs that started trading Tuesday ended above their IPO prices. Crypto I Acquisition Corp. (DAOOU) performed the best, closing on the NASDAQ at $11.15, up 1.2 percent from its $10 IPO price. Motive Capital Corp. II (MTVC.U) had the worst debut – dipping below its $10 IPO price in trading on the New York Stock Exchange to end at $9.99, technically a broken deal.

Vacasa, Inc. (VCSA) a vacation home rental platform, became a publicly traded company and made its debut on the NASDAQ on Tuesday after completing a business combination with TPG Pace Solutions Corp. (a Cayman Islands-incorporated SPAC) on Monday night (Dec. 6, 2021). Vacasa’s stock opened today (Dec. 7) on the NASDAQ at $10.99, up from its $10 SPAC IPO price, and hit an intraday high of $11.00 before losing altitude to close at $9.84.

“The SPACs are working again,” a seasoned IPO professional says. “Warrant coverage and discount to trust are the keys to success there.”

Last week, SPACs were the only game in town. A dozen SPAC IPOs got done, raising $2.41 billion. The week’s only IPO – Nuvectis Pharma (NVCT proposed) – did not make its debut on Dec. 1, 2021. Instead, the IPO was postponed amid the U.S. stock market’s volatility on fears related to the omicron variant of COVID-19 and the Federal Reserve’s plan to raise rates sometime next year.

Week of Dec. 13, 2021

Samsara, Inc. (IOT proposed) is expected to price its $753 million IPO on Dec. 15th – and it may wind up being the last IPO priced of the year. Next week’s IPO Calendar has just two deals so far – Samsara plus Fresh Vine Wine, Inc. (VINE proposed), a small-cap deal. More IPOs, especially SPAC IPO deals, may slip onto next week’s calendar as the filings keep coming in at the U.S. Securities and Exchange Commission.

Stay tuned.

(Never trade on proposed symbols. You might wind up owning something on the OTC Bulletin Board.)

Disclosure: Nobody on the staff has a position in any stocks mentioned above, nor do they trade or invest in IPOs. The staff does not issue advice, recommendations or opinions.

Disclaimer: A SCOOP Rating (Wall Street Consensus of Opening-day Premiums), is a general consensus taken, at press time, from Wall Street and investment professionals concerning how well an IPO might perform when it starts trading. The SCOOP Rating does not reflect the opinions of anyone associated with The SCOOP ratings should not be taken as investment advice. The rating merely reflects the opinion of the professionals at the time of publication and is subject to last-minute change.