Hanover Bancorp (HNVR) and ProFrac Holding (PFHC) gained slightly in their NASDAQ debuts during the week of May 9, 2022. But the New York-based community bank and the Texas oilfield services (fracking) company each had a bumpy ride on their first day of trading. For the week, bankers raised $844.8 million by pricing seven deals – three IPOs and four SPAC IPOs – in a U.S. stock market as wild as a bucking bronc. (Editor’s Note: This column – published Wednesday, May 11, 2022 – was updated May 18, 2022, with new information on Hanover Bancorp’s first-day closing price and news on ProFrac Holding’s first day of trading.)
Hanover Bancorp rose to $21.44 in its opening trade – up 44 cents or 2.1 percent from its IPO price – in its opening trade today (Wednesday, May 11, 2022) on the NASDAQ. The New York banking company’s IPO advanced to $21.57 – up 2.71 percent – by late morning trading; the stock rose more than 4 percent during the day. By the close, though, Hanover Bancorp had given up most of its gains to settle at $21.10, up 10 cents for a slim gain of 0.48 percent from its $21 IPO price. This small-cap bank IPO is NOT a broken deal, as initially reported, based on the new closing price of $21.10, as determined by the NASDAQ, according to Barron’s, which published a story on May 12, 2022, disclosing that the initial closing price of $20.11 was caused by an aberrant trade.
Hanover Bancorp’s IPO was downsized and priced at $21 – the low end of its $21-to-$23 range – on Tuesday night (May 10th).
It’s rare to see a small-cap bank IPO get trimmed at pricing. But these are unusual times. The U.S. stock market’s ugly three-day sell-off made the terrain extremely rocky for IPO bankers ahead of the Hanover Bancorp deal’s pricing.
Hanover Bancorp cut the number of shares in its IPO to 1.275 million shares, down about 6.3 percent from 1.36 million shares in the prospectus, to raise $26.8 million. Stephens, Inc. and Piper Sandler were the joint book-runners.
By the closing bell on Wednesday (May 11, 2022), stocks had given up their earlier gains. The S&P 500 fell 65.87 points, or 1.6 percent, to close at 3,935.18. The Nasdaq slid 373.44 points, or 3.2 percent, to 11,364.24, its lowest close since November 2020. The Dow fell 326.63 points, or 1 percent, to end at 31,834.11, and marked its largest five-day percentage decline in nearly two years, according to The Wall Street Journal. Earlier in the day, fresh data showed that the U.S. Consumer Price Index rose 8.3 percent in April, compared with the same month a year ago; that reading showed a drop from an 8.5 percent gain in March 2022, but it was above economists’ April forecast for an increase of 8.1 percent.
The end of the week gave Hanover Bancorp a TGIF moment. Shares of Hanover Bancorp closed on Friday, May 13, at $21.53, up 53 cents from their IPO price, on the NASDAQ.
Fracked Out
ProFrac Holding Corp. (PFHC), a Texas fracking company, delayed its IPO pricing by a day – to Thursday night, May 12, 2022 – following an SEC filing dated May 11, 2022, which disclosed that insiders were interested in buying up to 5.2 million shares – or almost a third of the 16 million shares in this initial public offering. The pricing range was $21 to $24.
With NYMEX crude futures around $105 a barrel and pressure on gas supplies due to Russia’s war on Ukraine, this fracking IPO was seen as a case of “right sector at the right time,” some IPO traders say.
In the countdown to the ProFrac IPO’s pricing, though, concerns about valuation kicked in and drove the conversation to talk about pricing below range.
ProFrac’s IPO was priced at $18 – $3 below the bottom of its $21-to-$24 range – on 16 million shares on Thursday night (May 12, 2022) to raise $288 million. J.P. Morgan, Piper Sandler and Morgan Stanley were the joint book-runners.
In its NASDAQ debut on Friday (May 13, 2022), ProFrac’s stock opened lower at $17.60, slipping briefly into the “broken deal” zone, and then regained its footing to inch back into the black – closing at $18.11, up 11 cents or up 0.61 percent.
Telecom Network’s Tiny IPO
The small-cap IPO of Actelis Networks (ASNS), an IoT and telecom network equipment company, was priced Thursday night (May 12, 2022) with a slight increase in size: 3.75 million shares (up from 3.0 million shares in the prospectus) were sold at $4 – the bottom of the $4-to-$6 range. The deal raised $15 million. Boustead Securities was the sole book-runner on the IPO.
Actelis Networks’ first day as a publicly traded company was a rough one. The stock opened at $3.90 – down a dime from its IPO price – quickly becoming a broken deal. At the closing bell, shares of Actelis were down 40 percent on Friday (May 13, 2022) to end the day at $2.40 on the NASDAQ.
Based in Fremont, California, Actelis Networks supplies hybrid fiber-copper networking solutions that offer high-speed connectivity for IoT (Internet of Things) networks and telecommunications.
Four SPACs
Wednesday’s NASDAQ debuts included a SPAC. Monterey Capital Acquisition Corp. (MCACU), the 66th SPAC deal priced so far in 2022, downsized its IPO at pricing: 8 million units, down from 10 million, at $10 each. EF Hutton was the sole book-runner.
On Thursday night, Prime Number Acquisition I Corp. (PNACU) was priced in sync with the terms in its prospectus: 6 million units at $10 each to raise $60 million. This deal became the 67th SPAC IPO priced in 2022 for the year to date. Prime Number Capital LLC and WestPark Capital, Inc. were the joint book-runners.
Two SPAC IPOs got the week’s IPO Calendar off to a quiet start: Investcorp India Acquisition Corp. (IVACU) raised $225 million with Credit Suisse as the sole book-runner, while Global Blockchain Acquisition Corp. (GBBKU) raised $150 million with I-Bankers Securities as the sole book-runner and Dawson James Securities as the co-manager.
Medical Marijuana
Bright Green Corp. (BGXX proposed), a federally licensed cannabis company, is planning a direct listing on the NASDAQ of up to 158.25 million shares. EF Hutton is the financial advisor. The timing of Bright Green’s direct listing was moved back a couple of times this week.
Some Wall Street wags were saying that popping a few cannabis gummies might not be a bad idea right now – just to take the edge off of watching the market.
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