HomeStreet Bank parent postpones $180M IPO
HomeStreet Bank's parent company Tuesday postponed the $180 million initial public offering that was expected this week, blaming "the significant volatility experienced in the capital markets over the past several days."
Seattle Times staff reporter
HomeStreet Bank's parent company Tuesday postponed the $180 million initial public offering that had been expected this week, blaming "the significant volatility experienced in the capital markets over the past several days."
Late last month, Seattle-based HomeStreet Inc. said it anticipated selling the offering at between $22 and $24 a share. The shares, to be traded on Nasdaq under the ticker symbol HMST, were expected to be priced as soon as Wednesday and to begin trading the next day.
In a statement Tuesday, HomeStreet CEO Mark Mason said the company and underwriter FBR Capital Markets are delaying the IPO "until the markets stabilize."
The postponement didn't surprise analysts, given the turmoil in global markets.
Last week, the Dow Jones industrial average fell nearly 700 points. On Monday, the Dow plunged more than 634 points — its worst day since the 2008 crash — after a leading bond-rating agency late Friday downgraded the United States' credit. Tuesday, the markets fluctuated widely before ending with a 429-point gain in the Dow.
Since last Thursday's sell-off, at least five of 12 offerings set to price this week were postponed, according to Connecticut-based Renaissance Capital, which tracks IPOs and manages IPO investment funds.
It didn't help HomeStreet that many bank stocks have traded especially badly the last few days, said Nick Einhorn, a Renaissance analyst.
"There are a lot of things grabbing investors' attention right now, and so they are less likely to have the time, inclination or risk appetite to consider investing in IPOs," Einhorn said.
Many companies also don't want to risk having their stock trade poorly on the day they go public, he said. As of Tuesday afternoon, Illinois-based Midland States Bancorp was still set for an initial public offering this week.
Even before the latest market dive, bank IPOs had been one of the worst performers among industry sectors so far this year, with a negative 11.9 percent average total return, according to a Renaissance analysis.
Just three months ago, when HomeStreet filed paperwork with the Securities and Exchange Commission announcing its IPO plans, the Dow was above 12,600 and pundits predicted the economy would improve in the second half of 2011.
If the IPO eventually goes forward at $23 per share, HomeStreet expects to raise about $164 million in net proceeds. It plans to invest about $132 million in the bank so that it will qualify as "well capitalized," according to its public filing.
Since May 2009, the bank has been operating under a regulatory order to bolster capital.
Richard Riccobono, director of banks for the state Department of Financial Institutions, said postponing the IPO wasn't an issue for his agency.
"We're pleased with the progress they've made," Riccobono said. "We're comfortable with them delaying [the IPO] so they can get a good deal and can get the capital."
Sanjay Bhatt: 206-464-3103 or firstname.lastname@example.org
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