The deal was Lihua International (NASDAQ: LIWA), based in China. The company is a developer, designer and distributor of low-cost, high-quality alternatives to pure copper magnet wire.
On Thursday evening, which was Sept. 3, Lihua priced 2.3 million shares at $4 each. The IPO started trading on Friday morning, Sept. 4, when many of Wall Street’s finest were already in the Hamptons or some other holiday hideaway to get an early start on celebrating Labor Day – or the last long weekend of summer.
Lihua International closed its opening day at $5.41, UP 35.3 percent from its offering price. Just by going public during the IPO market’s seasonal lull around Labor Day, this company proved there’s an exception to every rule.
Passing point of interest: In January 2006, the IPO was originally filed under the company name of Plastron Acquisition Corp. I. It was a “blank check” company formed for the purpose of raising capital to be used to “merge, acquire, or enter into a business combination with an operating business.”
Three years and eight months later, it made its debut as Lihua International.
This sets the stage for the fall’s IPO season.
A Baker’s Dozen
Traditionally, the IPO production line closes down about two weeks before and two weeks after the Labor Day break.
But that doesn’t mean the U.S. Securities and Exchange Commission’s filing window is the loneliest place in town. This year, it was quite busy.
From mid-August through the Friday before Labor Day, 13 companies -– or a baker’s dozen — filed plans to go public, and they were looking to raise $4.9 billion, according to the SEC’s filing window.
Of course, the winds of a bull market fanned the flames of new filings.
On Friday, Sept. 4, 2009, the Nasdaq Composite Index closed at 2,018.78, UP 59.1 percent from 1,268.64, its recent closing low on March 3, 2009. That’s just the kind of gain that will speed up IPO traffic.
Let’s take a look at last year.
From mid-August 2008 through the Friday before Labor Day, five companies filed plans to go public; they were looking to raise $1.6 billion, SEC records showed.
The icy claws of a bear market were in its face.
On Friday, Aug. 28, 2008, the Nasdaq Composite Index closed at 2,367.52, DOWN 17.2 percent from 2,859.19, its then-recent closing high on Oct. 31, 2007. When the market slumps like that, IPO traffic slams on the brakes.
Turning back to the present, there are been a couple of recent filings that have caught the attention of IPO players:
Dollar General (listing to be determined) filed for an IPO to raise $750 million on Aug. 20. Based in Goodlettsville, Tennessee, Dollar General is believed to be the largest discount retailer in the United States. The company has 8,577 stores in 35 states, mostly in the Southern, Midwestern and Eastern United States.
The initial SCOOP rating for Dollar General is 3-Stars.
Note: The SCOOP ratings are based upon a consensus of investment professionals. The SCOOP in IPOScoop is an acronym for (Wall) Street Consensus of Opening-day Premiums. Over the last 10 years, the consensus has been accurate nearly 80 percent of the time (pre-pricing) and almost 88 percent of the time (pre-trading). For details, please see “Archives: SCOOP Track Record From 2000 to Present.
Shanda Games Limited (NADSAQ: GAME proposed) filed for an IPO to raise $800 million on Sept. 3. Based in Shanghai, Shanda Games is an online game provider. The company is being carved out from Shanda Interactive Entertainment (NASDAQ: SHDA), a Shanghai-based interactive entertainment media company.
No SCOOP rating was available for Shanda Games at press time -– too soon to get a consensus.
Note: On May 11, 2004, Shanda Interactive priced its IPO of 13.9 million shares at $11 each. The stock closed on Friday, Sept. 4, 2009, at $49.69 — UP an eye-catching 351.7 percent from its initial offering price.
However new filings (S-1) were not the only thing hitting the SEC’s filing window over the past few weeks.
From mid-August through the Friday before Labor Day this year, 15 companies filed updated amendments (S-1/A filings) looking to raise $4.7 billion. That was a sharp improvement over the same time last year.
From mid-August 2008 through the Friday before Labor Day 2008, only three companies filed updated amendments looking to raise $1.2 billion.
One of this year’s recent S-1/A filings set proposed pricing terms on Thursday, Sept. 3. The company leaped onto the IPO calendar to be priced on the evening of Sept. 16 and trade on Sept. 17.
It was CreXus Investment (NYSE: CXS – proposed), a New York City-based specialty finance company recently formed to acquire, manage, and finance, directly or through its subsidiaries, commercial mortgage loans and other commercial real estate debt. On Sept. 3, the company filed an amendment to offer 33.3 million shares.
The current SCOOP rating for CreXus Investment is available to subscribers of IPOScoop.com.