Snapshot for week beginning 25 July. After a brief slump in 2020, the US initial public offering (IPO) market has managed to bounce back to record levels.
Flush with liquidity and with few takers for loans, banks and financial institutions have dialled up their investments in initial public offerings (IPO) through the qualified institutional buyer (QIB) route, touching a four-year high so far in 2021.
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The list of upcoming IPOs for 2021 is still long. Behind the revival of Wall Street’s wheeling and dealing is a rapid snap-back rally and rock-bottom interest rates.
In the first half of 2020, the initial public offering market was severely impacted by the coronavirus pandemic, affecting both potential listings and companies that had recently gone public.
But by summer, IPO activity had surged again, and the fall saw record-breaking IPOs in the tech space. That momentum has carried through into 2021.
The pace of offerings underscores the demand for growth and shows that IPOs remain the preferred route to the market despite the rise of direct listings, which have no underwriters and come with much lower advisory fees.
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By GlobalDataIt’s a highly lucrative business for Wall Street, and there’s no slowdown in sight.
Robinhood valued at $32bn after selling shares in IPO at $38 per share
Robinhood, whose stock trading app has surged in popularity among retail investors, sold shares in its IPO at $38 apiece, valuing the company at about $32bn.
Ahead of its Nasdaq debut, Robinhood priced shares at the low end of the $38 and $42 range.
The company, which will trade under ticker symbol HOOD, sold 52.4 million shares, raising close to $2bn. Co-founders Vlad Tenev and Baiju Bhatt each sold about $50m worth of stock.
Robinhood has become a central gateway to the markets for young and first-time investors.
The app, which offers equity, cryptocurrency and options trading, as well as cash management accounts, experienced record trading levels during the pandemic and amid the meme stock craze of early 2021.
Deal of the week: Southern States Bancshares to Raise $42m in Initial Public Offering (IPO)
Southern States Bancshares, an Alabama bank with 15 branches in Alabama and Georgia, announced terms for its IPO on Friday.
The Anniston, AL-based company plans to raise $40m by offering 2 million shares (50% secondary) at a price range of $19 to $21. At the midpoint of the proposed range, Southern States Bancshares would command a market value of $174m.
Southern States Bancshares is a bank holding company that operates primarily through its wholly-owned subsidiary Southern States Bank, a full-service community banking institution that offers deposit, loan, and other banking-related products and services to businesses and individuals.
It provides banking services from 15 offices in Alabama and Georgia, and also operates a loan production office in Atlanta.
As of March 31, 2021, Southern States Bancshares had total assets of $1.5 billion, gross loans of $1.1bn, total deposits of $1.3bn, and total stockholders’ equity of $145m.
Southern States Bancshares was founded in 2007 and booked $55m in revenue for the 12 months ended March 31, 2021. It plans to list on the Nasdaq under the symbol SSBK.
Keefe Bruyette Woods, and Truist Securities are the joint bookrunners on the deal. It is expected to price during the week of August 9, 2021.
The big winners of the IPO boom
Underwriters generated close to $400m in fees for assisting with the IPOs. They’re sitting on an additional $259m in paper gains as of Friday’s close, assuming they exercise their options to purchase all of their allotted shares at the IPO discount.
In the past week’s IPOs, underwriting fees ranged from 2% of the total amount raised, in the case of ride-hailing company Didi’s massive financing, to 7% for smaller deals like the offerings from health companies CVRx, Aerovate Therapeutics and Acumen Pharmaceuticals.
Goldman Sachs and Morgan Stanley, as usual, reeled in the highest fee revenue by serving as the lead managers for the IPOs of Didi and cybersecurity software vendor SentinelOne, the two biggest offerings of the week.
Morgan Stanley and JPMorgan Chase were the lead underwriters in the IPO for Turkish online shopping company D-Market Electronic Service & Trading, legal services site LegalZoom and Krispy Kreme, which were the week’s third-, fourth- and fifth-biggest offerings, respectively.
