Akanda Corp. (AKAN proposed), a small medical cannabis company, soared in its NASDAQ debut on Tuesday (March 15, 2022) – opening at $30 – or 7.5 times its $4 IPO price. The Akanda deal was the first traditional IPO of March 2022 – braving the market’s chilly waters at a time when Wall Street was focused on Russia’s war in Ukraine and the Fed’s meeting. Akanda raised $16 million in its IPO, which was priced Monday night (March 14, 2022) after the market’s close. Up until the Akanda deal, March had seen only SPAC IPOs in the first two weeks. (Editor’s note: This column, published Monday morning, was updated Thursday, March 17, with news on the Goldenstone SPAC’s debut.)
The major U.S. stock indexes rallied in relief on Wednesday (March 16, 2022) after the Federal Reserve raised the fed funds rate by 25 basis points – as expected. This was the Fed’s first interest-rate increase since 2018.
“The market doesn’t like uncertainty, and Jay Powell did an incredible job” of signaling what the Fed intends to do, Kourtney Gibson, president of Loop Capital Markets, told CNBC in its “Overtime” program after Wednesday’s closing bell, when asked to comment on the relief rally.
A 25-basis-point rate increase was baked into expectations after Federal Reserve Chairman Jerome Powell said that’s what he would support in his congressional testimony last month. But some on the Street believe that a 50-basis-point rate increase was needed to control inflation, running at a 40-year high.
President Joe Biden announced another $800 million in military aid for Ukraine on Wednesday, within hours after Ukraine’s President Volodymyr Zelensky urged Congress – in a virtual address via video link – to consider a “no fly zone” to protect his country from Russia.
On Thursday, U.S. stocks trimmed early losses and bounded back into the green in afternoon trading on St. Patrick’s Day. By the close, the major U.S. stock indexes had booked their third straight day of gains: The Dow Jones Industrial Average shot up 417.66 points, or 1.2 percent, to end at 34,480.76, while the Nasdaq Composite Index jumped 178.23 points, or 1.3 percent, to close at 13,614.78, and the S&P 500 climbed 53.81 points, or 1.2 percent, to finish at 4,411.67, according to The Wall Street Journal.
Stocks had closed higher on Tuesday (March 15) – the day before the Fed’s rate decision – after oil slid below $100 a barrel.
On Monday, the Nasdaq had dropped over 260 points – or 2 percent – on Monday, while the Dow edged up 1 point and the S&P 500 slipped 31 points as investors kept a close watch on developments in the third week of Russia’s invasion of Ukraine and ahead of the expected rate increase this week from the Federal Reserve. The S&P 500 hit a “death cross” on Monday, which Barron’s said could provide a good opportunity for longer-term investors.
On the IPO front: The highly anticipated Chobani (CHO proposed) deal has been delayed until at least the second half of 2022 or possibly 2023, The Wall Street Journal reported late Friday, quoting “people familiar with the matter.” Chobani’s president and several top executives have recently left the company, according to The WSJ, which said the delayed IPO was a factor in their departures.
Early Monday, The Fresh Market Holdings (TFM proposed) amended its IPO plans without stating terms in a filing dated March 11, 2022. The Fresh Market, a specialty grocery chain, is controlled by Apollo, the private equity company that acquired it and took it private in 2016. The proposed IPO would be The Fresh Market’s return to life as a publicly traded company.
Bankers raised $370 million last week (the week of March 7, 2022) by pricing three SPAC IPOs: Lakeshore Acquisition II Corp. (LBBBU), $60 million; Patria Latin American Opportunity Acquisition Corp. (PLAOU), $200 million, and Nubia Brand International (NUBIU), $110 million. A tiny NYSE-American uplisting deal for The Marygold Companies (MGLD) produced just $3 million in proceeds.
Medical Pot IPO on Pi Day
Monday night is where the action was – for the IPO Calendar this week. Akanda Corp., a very early-stage medical cannabis company, priced its small-cap IPO, as expected, after the closing bell on Pi Day – Monday, March 14, 2022.
The Akanda deal consisted of just 4 million shares at $4 each. The stock officially opened for trading at 10:03 a.m. EDT on Tuesday – jumping to $30 on volume of 7,005 shares, according to NASDAQ. The opening trade marked Akanda as a moonshot. (A moonshot is an IPO that doubles its IPO price – or more – on the first day of trading.) Akanda’s stock closed on Tuesday at $10.50, up 162.5 percent from its IPO price – still firmly in moonshot territory.
Boustead Securities was the sole book-runner.
If Akanda’s name seems slightly familiar, that’s because the IPO was recently relaunched after a postponement last month. Akanda postponed its IPO on Feb. 24, just hours ahead of pricing, due to the stock market’s volatility on the day that Russia invaded Ukraine. In an F-1/A filing dated Feb. 14, 2022, the IPO’s price was cut to $4 – the low end of its initial range of $4 to $6 – and the number of shares was kept at 4 million.
Based in London, Akanda intends to cultivate and process natural cannabis on land in the Kingdom of Lesotho in southern Africa. The land is leased from a local non-profit development trust controlled by Akanda’s executive chairman. Akanda plans to import and sell medical cannabis-based products to the domestic market in the United Kingdom. Akanda also says it will sell medical cannabis and related products to wholesalers in international markets, according to the prospectus.
A SPAC Debut on St. Patrick’s Day
Goldenstone Acquisition Ltd. (GDSTU proposed) – a SPAC of just 5 million units at $10 each – was priced Wednesday night (March 16, 2022). The Goldenstone IPO started trading on St. Patrick’s Day (Thursday, March 17), opening at $10.02 – up 2 cents from its $10 IPO price. Goldenstone gave up a penny of its gain to close Thursday at $10.01. Maxm Group LLC was the sole book-runner.
One SPAC – ONS Acquisition Corp. (ONS.U proposed) – is on the watch list with its pricing status described as “day to day.” This SPAC – 15 million units at $10 each – is a New York Stock Exchange listing. Ladenburg Thalmann is the sole book-runner.
Filings for mostly small-cap IPOs and SPACs continue to flow into the IPO pipeline via the SEC’s filing window.
Meanwhile, singer and fashion mogul Rihanna is considering an IPO for her Savage x Fenty lingerie company that could value it at about $3 billion, Bloomberg reported late Thursday (March 10, 2022).
Most IPO professionals, however, expect the IPO market to stay quiet until the overall U.S. stock market stabilizes from its current bout of volatility.
(Never trade on proposed symbols. You might wind up owning something on the OTC Bulletin Board.)
Disclosure: Nobody on the IPOScoop.com staff has a position in any stocks mentioned above, nor do they trade or invest in IPOs. The IPOScoop.com staff does not issue advice, recommendations or opinions.
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