The IPO Buzz: Lucas GC Limited (LGCL) Prices Upsized IPO at $4.00 – Low End

Lucas GC Limited (LGCL), a profitable Chinese job recruitment platform for HR professionals, is the first IPO priced in March 2024. Lucas upsized its IPO at pricing – to 1.5 million shares – up from 1.25 million in the prospectus – and priced the IPO at $4.00 – the low end of its $4.00-to-$6.00 range – to raise $6.0 million on Monday night, March 4, 2024.  (Editor’s Note: Updates column with Lucas stock’s volatile first day of trading)

For Lucas shares, the first day of NASDAQ trading was a swing from a strong opening gain to a sharp slide at the close:

* Lucas opened at $5.00 – up $1.00 for a 25 percent gain from the IPO price – at 11:10 a.m. EST today – Tuesday, March 5, 2024 – on the NASDAQ. Volume on the opening trade was 96,549 shares, according to NASDAQ.

* Lucas closed at $3.61 – down 39 cents for a 9.75 percent drop from the IPO price – to end its NASDAQ debut as a broken deal on volume of about 1.42 million shares. The stock broke issue price at about 1:14 p.m. EST, recovered by about 1:50 p.m. EST and held above its $4.00 IPO price until late in the session.

Joseph Gunnar & Co. was the sole book-runner.

The Lucas IPO’s size is small, but the company is not a small-cap entity.  Lucas GC Limited had a market cap (valuation) of about $396.6 million, assuming mid-point pricing of its range, according to the prospectus.

The Cayman Islands-incorporated holding company offered the stock in the IPO, and not the underlying recruitment business, the SEC filings show.

Serving China’s Professional Job Hunters

Lucas GC Limited targets HR professionals and professional job seekers in China with its AI-driven Platform-as-a-Service, the prospectus says. The company uses artificial intelligence (AI) as well as data analytics and blockchain technologies to serve its core clientele of human resources (HR) professionals in China, according to its SEC filings.

The Beijing-based company describes itself as “the largest technology-driven online agent-centric human capital management service provider targeting professionals based on Platform-as-a-Service, or PaaS, in China,  in terms of the number of active users in the human resources industry as of June 30, 2022, and total net revenues for the year ended Dec. 31, 2021,” the prospectus says.

As of Dec. 31, 2022, Lucas GC Limited had about 431,220 active registered users on its proprietary platforms, Star Career and Columbus,  the prospectus says. Lucas GC Limited says its platforms’ users “receive customized job recommendations and work as talent scouts to source suitable candidates for our corporate customers through their own trusted private social network, as well as receive training and other value-added services.”

On the way to going public, Lucas GC Limited changed the deal’s size, price range and investment banking team a few times. On Feb. 15, 2024, Lucas GC Limited slashed its IPO’s size by 68.8 percent to 1.25 million shares – down from 3.07 million shares – and cut the price range to $4.00 to $6.00 – down from $6.00 to $7.00 – to raise an estimated $6.25 million, if priced at the mid-point, according to its F-1/A filing. In that same SEC filing, Lucas GC Limited disclosed that it had named Joseph Gunnar & Co. as the sole book-runner, replacing the previous joint book-runners Prime Number Capital and Jones Trading.

The Chinese job-recruitment company filed to go public about a year ago – on Feb. 28, 2023.

Lucas GC Limited is profitable, according to the prospectus. For the 12 months that ended June 30, 2023, Lucas GC Limited reported $9.62 million of net income on $173.71 million of revenue, the prospectus says.

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