The IPO Buzz: When the Monster Returns

This summer’s IPO market is turning out to be much like the B-grade horror movies of yesteryear. Every time you think the monster has been killed, surprise! It crawls back out of the shadows. Bankers found two SPACs, or “blank check” companies, to go public this week and they mixed in a reshuffled carryover from the past to put together an IPO calendar, but more on this in a minute.

A more interesting story came out last week via the U.S. Securities and Exchange Commission (SEC) filing window. Eight companies filed to go public. They are expecting to raise $995.3 million. That fact in itself is not all that interesting. But check out where the traffic is coming from: Five are from China – and they are looking to raise $709 million in the U.S. capital markets.

The largest of the SEC filings was the $300 million IPO of Qutoutiao (QTT proposed). The company believes it is the No. 2 mobile content aggregator in China and the name “Qutoutiao” means “fun headlines” in Chinese, according to its prospectus. The company offers articles and short videos from professional media and freelancers and presents customized feeds to users. The SEC filing did not list pricing terms nor did it specify an offering date.

There’s another significant fact to take into account when considering this influx of Chinese IPOs: The Shanghai Composite Index closed on Friday, Aug. 17, 2018, at 2,668.97 – down 25 percent from 3,559.47, its previous closing high on Jan. 24, 2018.

Now let’s take a look at this week’s trio of IPOs.

A Pair of SPACs

Megalith Financial Acquisition (MFACU proposed), based in New York City, is a newly organized “blank check” company formed to focus its search on companies in the financial services industry or businesses providing technological services to the financial industry, commonly known as fintech businesses.

Tenzing Acquisition (TZACU proposed), based in New York City, is a newly organized “blank check” company formed to focus on businesses that operate in India.

 A Blast from the Past

Bionano Genomics (BNGOU proposed), based in San Diego, California, is a life sciences instrumentation company in the genome analysis space. The company is developing the Saphyr system. The platform is for ultra-sensitive and ultra-specific structural variation detection that enables researchers and clinicians to accelerate the search for new diagnostics and therapeutic targets and streamline the study of changes in chromosomes, a field known as cytogenetics. Note: Insiders have issued indications of interest to buy $8 million, or 50.2 percent, of the $15.9 million IPO.

The reshuffle: The current size of the offering is 2.45 million units at $6 to $7 each to raise $15.9 million, down from the original proposed offering of 3.35 million shares at $8 to $10 each to raise $30.2 million.

(For more information about these companies, please check the profile found on the website.)

August’s Quiet Close

Once again, August appears to be fading into “over and out” mode. For the week of Aug. 27th, there is nothing on the IPO Calendar.

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 opinion.