The IPO Buzz: Cashing the blank checks

Of the three “blank check” companies, (specified purpose acquisition company or SPAC), one was priced on Tuesday evening, Feb. 28, 2006. The other two were priced on Thursday evening, March 2, 2006.

 

But don’t turn up your noses at these deals. They batted 1,000 percent in the IPO ballpark. Each traded higher in the aftermarket.

 

They were Grubb & Ellis Realty Advisors (AMEX: GAV.U), India Globalization Capital (AMEX: IGC.U) and Oracle Healthcare Acquisition (OCTBB: OHAQU).

 

Grubb & Ellis Realty Advisors is an Illinois-based “blank check company” formed to acquire commercial real estate properties. Grubb & Ellis offered 20.8 million units at $6 each on Feb. 28, 2006. The IPO closed its opening day at $6.10 and the week of $6.11, UP 1.8 percent from its initial offering price.

 

India Globalization Capital is a Maryland-based “blank check company” formed to buy a business with primary operations in India. India Globalization offered 9.8 million units at $6 each on March 2, 2006. The IPO started trading in Friday’s market and closed at $6.35 per unit, UP 5.8 percent from its initial offering price.

 

Oracle Healthcare Acquisition is a Connecticut-based “blank check company” formed to acquire a business operating in the healthcare industry. Oracle Healthcare offered 15 million units at $8 each on March 2, 2006. The IPO started trading in Friday’s market and closed at $8.50 per unit, UP 6.3 percent from its initial offering price.

 

And all three closed the week ABOVE their initial offering prices. The average gain was 4.8 percent per unit. That was much better than the underlying stock indexes. Here’s how the rest of Wall Street finished the week:

 

The Dow Jones Industrial Average closed at 11,021.59, DOWN 0.36 percent from 11,061.85 on Friday, Feb. 24. 2006.

 

The Nasdaq Composite Index closed at 2,302.60, UP 0.68 percent from 2,287.04 on Friday, Feb. 24. 2006.

 

The S&P 500 closed at 1,287.23, DOWN 0.17 percent from 1,289.43 on Friday, Feb. 24. 2006.

 

Let’s take a closer look at the “blank check” companies. So far in 2006, bankers have priced five SPACs. They raised $373 million. That’s a small percentage of this year’s IPO traffic. By the end of the first week of March, bankers have priced 40 deals. They raised $7.3 billion.

 

For 2005, banker priced 28 SPACs. They raised $1.98 billion. Once again, that’s a small percentage of 2005’s IPO traffic. In 2005, the bankers priced 236 deals. They raised $37 billion.

 

2006 IPO Scorecard:

IPOs priced: 40

Up: 30

Down: 10

Average gain: 18.2 percent

 

This year’s IPO scorecard reads well — very well — considering the Nasdaq Composite Index has squeaked out a gain of just 1.29 percent.

 

And what about the “blank check” companies?

 

2006 SPAC Scorecard:

SPACs priced: 5

Up: 5

Down: 0

Average gain: 5.4 percent

 

 

Bankers plan to price three deals this week. And one is a “blank check” company. Here’s what is on the calendar: Acquicor Technology – the SPAC – (AMEX: AQR.U proposed); Alexza Pharmaceuticals (Nasdaq: ALXA proposed) and Eagle Test Systems (Nasdaq: EGLT proposed). They hope to raise $308 million.