The IPO Buzz: Missing

Where are the big banks? Their absence on the IPO Calendar tells you all you need to know about market conditions. The big names won’t roll the dice if the casino isn’t nice.  

The U.S. stock market slid today on worries about war between Russia and Ukraine – along with concerns that the Fed might raise interest rates at a faster pace, The Wall Street Journal reported. The sell-off accelerated after U.S. Secretary of State Antony Blinken ordered the closing of the U.S. embassy in Kyiv and the relocation of U.S. diplomatic operations to western Ukraine – a move that some saw as a sign of an imminent invasion by Russia. St. Louis Federal Reserve Bank President James Bullard told CNBC that the central bank should hike interest rates quickly. Both the Dow and the S&P 500 ended Monday’s session lower, while the NASDAQ Composite Index finished just about flat. Today marked the third straight decline for stocks.   

“Investors won’t line up for IPOs at a time like this,” a veteran IPO trader says. “The big banks aren’t going to put their deals out there if they don’t think they can get them done. You won’t see them even file (many) deals at a time like this.”

This week’s extremely thin IPO Calendar is a case in point.  It’s just a few very small-cap deals and a handful of SPACs. One IPO initially set for tonightCariloha, Inc. (ALOHA proposed)was pulled back. The deal is still on the “week of Feb.14” pricing roster.

After the market’s close, two SPAC IPOs were priced Monday night (Feb. 14, 2022):

Genesis Unicorn Capital Corp. (GENQU) priced its SPAC IPO of 7.5 million units at $10 each to raise $75 million.  EF Hutton was the sole book-runner.

Genesis Unicorn Capital Corp., based in Princeton, N.J., will search for biotech or pharmaceutical companies with an enterprise value between $200 million and $1 billion. The company will consider acquisition targets in any country except China.

-A SPAC I Acquisition Corp. (ASACU) priced its SPAC IPO of 6.0 million units at $10 each to raise $60 million. Chardan Capital Markets was the sole book-runner. This deal was the 38th SPAC IPO priced so far in 2022.

A SPAC I Acquisition Corp. will search for TMT (tech, media and telecom) acquisition targets in the U.S. and Asia, excluding China, with enterprise values between $250 million and $600 million.

A tiny NASDAQ uplisting – Vivakor (VIVK)started trading Monday and the stock ended below its $5 offering price – a sourball debut on Valentine’s Day.

The Eyes Have It

Looking ahead to when the market stabilizes, IPO traders say there are names on their “wish list.”

“We have some good ones in the pipeline – Bausch + Lomb, for instance,” an experienced IPO trader says. “That one should get some good action. The Arm deal is another one,” he added.

He was referring to expectations that Japan’s SoftBank Corp. will spin off Arm, its British chip-design company, in an initial public offering sometime within the next year after Arm’s $40 billion sale to Nvidia Corp. fell through last week. The deal was scrapped “because of regulatory challenges,” according to the companies’ statement, as reported by The WSJ.

Bausch + Lomb (BLCO proposed), the biggest name in global eye care, filed its S-1 with the SEC a month ago (Jan. 13, 2022). Some IPO experts believe that the Bausch + Lomb IPO could raise as much as $3 billion.  Bausch + Lomb is planning a dual listing on the New York Stock Exchange and the Toronto Stock Exchange.

It’s anyone’s guess as to when the big banks will return to the IPO runway.

History shows that it usually takes about six weeks for the IPO market to come back to life after the U.S. stock market hits bottom. The catch comes with recognizing when that low has been set.

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.