Imperial Capital calls off IPO amid investor indifference
Wall Street’s hope for a revival of the initial public stock offering business this year has been quashed by fading investor interest in new deals.
The latest casualty: Century City-based boutique investment bank Imperial Capital Group, which on Wednesday abruptly postponed its IPO.
Imperial’s underwriters, Bank of America Merrill Lynch and JMP Securities, couldn’t attract enough buyers despite a decision Tuesday to cut the proposed offering price to a range of $13 to $15 a share from a range of $15 to $17.
Imperial, whose investment banking clients are mid-size companies, also provides trading services to institutional investors.
When it filed for the IPO last fall Imperial hoped to raise as much as $150 million. If it had been able to sell the planned 6.7 million shares at $14 each, the midpoint of the reduced price range, the company would have raised $94 million.
Imperial’s decision to pull back followed a poorly received IPO by Ironwood Pharmaceuticals Inc., a Cambridge, Mass., firm that is developing a treatment for chronic constipation.
Ironwood had expected to price its IPO as high as $16 a share. Instead, the company late Tuesday agreed to sell 16.7 million shares at $11.25 each. Its shares rose 40 cents to close at $11.65 in Nasdaq trading Wednesday.
Ironwood’s pricing was “aggressively needy,” said Ben Holmes, head of MorningNotes.com, an IPO research firm.
Investors may be balking at new IPOs because the issues that came to market in January have mostly performed poorly, not unlike the stock market overall. Of seven new stock deals priced last month, five are trading below their IPO prices, according to data firm Renaissance Capital.
“Investors are looking at deals very carefully to see if they want to be involved,” said Sal Morreale, who follows the IPO market at brokerage Cantor Fitzgerald.
Founded in 1997, Imperial Capital was a unit of Imperial Credit Industries before becoming a stand-alone business. Imperial Credit, a Southland financial firm spun off from Imperial Bancorp (now part of Comerica Inc.), filed for bankruptcy protection in 2003.
Imperial Capital says it has been profitable every year since 1999, but it remains a small player. The firm earned $13.9 million in the first nine months of 2009 on revenue of $86 million.
