The IPO Buzz: Rough Start, Slim Opening

The stock market got off to a memorable start last week. It began the year like no other. With Chinese stocks plunging and oil prices falling, the major U.S. stock market indexes got pounded. The Dow Jones Industrial Average lost 1,078.58 points to close at 16,346.45, DOWN 6.19 percent for the week and the year as well. The S&P 500 Index slid 121.91 points to close at 1,922.03, DOWN 5.96 percent for the week and 2016. The NASDAQ Composite Index dropped 363.78 points to close at 4,643.63, DOWN 7.26 percent for the week and the year so far.

But in spite of all the rough stuff, yes, Virginia, there is an IPO market.

Building Homes and Bridges

Interestingly enough, this week’s IPO calendar has two names, depending upon market conditions. One is a “blank check” offering being listed as “the week of” and the other is a construction company expected to be priced Thursday evening for trading Friday morning. They are:

Pulte Acquisition (PLTEU – proposed) is the “blank check” offering. To date, the company’s efforts have been limited to organizational activities. Pulte’s efforts to identify a prospective target business will not be limited to any particular industry or geographic region, although it intends to focus its search on target businesses operating in the homebuilding, construction, building products, building services and homeowner services industries.

The name, Pulte, of course, is best known in connection with PulteGroup, Inc., which is one of the largest U.S. homebuilders, traded under the symbolPHMon the New York Stock Exchange.

Shimmick Construction (SCCI – proposed) is an Oakland, California-based heavy civil construction company offering general construction, construction management and design-build services to federal, state and local public agencies and private customers in California and the Western United States.

Among Shimmick’s recent high-profile projects are the $245 million seismic and wind retrofit of the Golden Gate Bridge and the $772 million extension of the Bay Area Rapid Transit (BART) rail commuter system south from Fremont to San Jose, according to the prospectus.

Shimmick reported for the nine months ending Sept. 30, 2015, net income of $7.4 million on construction revenues of $360.6 million, UP from net income of $6.9 million on construction revenues of $219.6 million for the same period a year ago.

Bankers plan to offer 6.25 million shares at $11 to $13 each. The company plans to offer about 4.2 million shares and insiders plan to offer about 2.1 million shares.

Worth repeating: The deal is expected be priced on Jan. 14. This pricing date is in line with the initial public offering dates for the first IPO pricings of the year from years gone by.

The following week, however, which is the week of Jan. 18, is clean and green for now. That week will be short week, though. The U.S. stock market will be closed on Monday, Jan. 18, for the federal holiday in honor of the late Rev. Martin Luther King, Jr.’s birthday.

Early Traffic Signals

Nevertheless, last week was not all bad news. There were positive developments at the U.S. Securities and Exchange Commission’s filing window. Twelve companies – that’s right an even dozen – filed plans to go public, looking to raise over $1 billion. A year ago, for the week ending Jan. 9, 2015, six companies had filed plans to go public, looking to raise about $336 million.

Stay tuned.


Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinions.