☕️ IPO pop art

Pricing an IPO is an investment banking art form

Good morning.

There’s an art to pricing an IPO. Price it too high, and selling shareholders will maximise their windfall, but there’s a risk the stock will tank once it starts trading, upsetting the institutions that backed the deal potentially your own employees . Price it too low and you might get the day one pop, but there will be claims money was left on the table.

It’s a debate that rolls around every time there is a big IPO, which we haven’t had for ages. Until this week when UK chip designer ARM listed on the Nasdaq. Underwriters Goldman Sachs and selling shareholder Softbank seemed to get it right: the deal was priced at the top of the indicated range, and there was still a healthy pop on the first day of trading. That’s good news for those hoping for a thawing in the frozen market for new listings.

*Stock data as of the market close. Commodities and crypto data in USD.

LOI Subscriber #TBD

MARKET MOVERS

Market News: Uranium prices hit their highest levels in a decade on the back of a report from the World Nuclear Association that demand for the commodity would double between now and 2040 as small cell nuclear reactors gain traction in the US, Europe and Asia. The forecast boosted the biggest uranium stock on the ASX Paladin Energy, and also the ones with the coolest names, Deep Yellow and Boss Energy.

Together with Stake | Invest on Wall St and the ASX

THE QUICK SYNC

  • The ECB hiked interest rates to a record high of 4%, but signalled further raises may be off the table. (CNBC)

  • Goldman Sachs has fired several executives in its transaction banking business for violating its communications policy. (Reuters)

  • Huawei’s new smartphone has sparked concerns that US chip controls on China are failing. (Capital Brief)

  • Johnson & Johnson is replacing its iconic logo, which has been in place for 135 years. (CNN)

  • Google's next 25 years may be more difficult than its first. (Capital Brief)

TRADING FLOOR

M&A:

  • EQT Group has shown interest in Ramsay Health Care's Asian hospital business. (The Australian)

  • ACL's $1.58bn merger with Healius faces a hurdle as the ACCC decision is pending. (BNA)

  • Tetris Energy plans to sell its entire 3.4 gigawatts early-stage development platform. (AFR)

  • Atturra is anticipated to respond with an increased bid for Cirrus Networks Holdings after its initial offer of 5.3¢ per share. (AFR)

  • Edify Energy is currently in discussions with investors regarding a 185-megawatt battery energy storage system in Victoria, with assistance from ICA Partners. (AFR)

Capital Markets:

  • Cuscal is in the process of planning a modest sell-off of its business and a small capital raising effort, aiming to secure a valuation ranging from $300m to $500m. (The Australian)

VC:

  • Torqn, a mining tech startup, is kicking off a $5m Series A funding round via MST Financial. (AFR)

  • Flagship has confirmed the successful completion of its seed funding round, raising $2m with Tidal Ventures leading the investment. (Smart Company)

  • Simon Molnar, the sibling of Afterpay co-founder Nick Molnar, has successfully raised $2m in seed-round funding. (AFR)

  • Blackbird's Rick Baker on gut feel, pattern matching and the keys to VC success (Capital Brief)

Others:

  • Investors are keeping a close eye on the actions of Latitude Group's principal shareholders for their next moves. (The Australian)

  • Perpetual is closing down two funds and parting ways with Ashley Pittard, Pendal's head of global equities, and Thomas Rice, the technology portfolio manager. (AFR)

  • Myer lifted its full-year net profit in line with forecasts but flagged slowing sales in the new fiscal year (Capital Brief)

  • The search for a new CEO at GPT Group is taking longer than expected. (The Australian)

  • Fishburners has added Taryn Williams and Samantha Martin Williams to the board of the early-stage startup community hub. (Startup Daily)

  • Raphael Geminder's private firm has cautioned Pact Group shareholders that dividends are indefinitely suspended as part of his privatization proposal. (AFR)

INSIGHT OF THE WEEK BY STAKE

Whether you’re a Cadbury lover or a Nestlé fan, your favourite chocolate goods have probably got pricier in 2023. Though most commodities that rallied in 2022 have dropped in 2023, helping inflation cool down, cocoa prices are up over 40% YTD and show little sign of slowing down. The reason? In addition to this year’s unpredictable weather, rising fuel and fertiliser prices in 2022 caused producers to plant less, not only due to higher costs, but also due to forecasts of slowing demand that didn't materialise. Great news for commodity traders, not so sweet for chocolate makers.

THE WATERCOOLER