The IPO Buzz: Three Tiny Deals Priced Ahead of the Fed

Three micro-cap deals got done Tuesday night to start trading today (Wednesday, June 15, 2022) – just hours ahead of the Fed’s expected rate hike this afternoon. Two of these three deals were small-cap IPOs. The other one was a public offering in connection with a NASDAQ uplisting from the OTCQB. All three were downsized deals. (Editor’s Note: This column, published on Wednesday morning, June 15, 2022, was updated in the afternoon following the Fed’s interest-rate increase.)

Bankers raised $23 million from these three deals:

  • Heart Test Laboratories, Inc. (HSCS and HSCSW) – a frontline ECG maker’s unit IPO – 1.5 million units sold, down from 1.75 million units in the prospectus, and priced at $4.25 per unit – below the bottom of the $4.50-to-$5.50 price range – to raise $6.4 million. The Benchmark Company was the sole book-runner.
  • Lytus Technologies PTV.Ltd. (LYT) – an Indian platform services company’s IPO (content streaming/telecasting services for over 8 million active users in India and a telemedicine business) – 2.61 million shares sold, down from 3.25 million shares in the prospectus, and priced at $4.75 – the bottom of its $4.75-to-$6.75 price range – to raise $12.4 million. Spartan Capital Securities and Pacific Century Securities were the joint book-runners. This IPO was rejiggered many times on its way to going public – slashed in size and revamped in structure. (It had been proposed at one time as a unit offering, but the plan to offer warrants was scrapped.)
  • Connexa Sports Technologies Inc. (CNXA) – a public offering, in connection with the NASDAQ uplisting, of this portable tennis ball launcher company – 1.05 million shares were sold, including the 1 million shares in the prospectus and 48,750 shares from the bankers’ partial exercise of the overallotment, or the greenshoe, and sold at $4.00 per share, below the stock’s June 14 as-converted close on the OTCQB at $6.80. The deal raised $4.2 million. This public offering was drastically reduced in size before pricing; its initial terms were 1.3 million shares at $10. Northland Capital Markets and Spartan Capital Securities were the joint book-runners.

For Wall Street, the main event today is the Federal Reserve’s announcement expected at 2 p.m. EDT, after the end of the Federal Open Market Committee’s meeting. A rate increase of 75 basis points (0.75 percentage point) is widely expected.

The three major U.S. stock indexes each rose more than 1 percent this morning in anticipation of a 75-basis-point rate hike. If the Fed pulls that trigger, this would be the biggest increase in the benchmark fed funds rate since 1994, according to The Wall Street Journal.

The Street wants to see the Fed “just get it over with,” as one veteran IPO trader put it, adding: “They’ve been way behind on the inflation curve. We have to get this crazy inflation under control.”

Economic data on Friday (June 10) showed that the U.S. Consumer Price Index rose at an annualized rate of 8.6 percent in May, the highest in 41 years. The CPI data triggered a broad sell-off in the stock market, pushing the S&P 500 into a bear market on Monday (June 13).

**Update: As expected, the Fed raised the fed funds rate by 75 basis points (0.75 percentage point) – the largest interest-rate increase since 1994 – and indicated that it “would continue lifting rates this year at the most rapid pace in decades as it races to slow the economy and combat inflation that is running at a 40-year high,” according to The Wall Street Journal.

U.S. stocks held their gains after the Fed’s rate-hike announcement.

Stay tuned.

(For more information on this company, please see our: IPO Calendar – Click on the company’s name and the hyperlink will take you to the company’s IPO Profile, which includes a link to the prospectus.)

(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.