(Bloomberg) — Nasdaq Inc. is intensifying its scrutiny of IPOs for small-cap companies, according to people familiar with the matter, after a series of big gains in newly listed shares quickly evaporated.
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The exchange is taking a closer look at potential small-cap issuers in various industries and countries, said the people, who asked not to be identified because the information is private. As a result, some companies have put their IPO plans on hold, the people said.
The Nasdaq markets “are and will remain open,” the exchange responded to a query from Bloomberg News, adding that it is carefully reviewing companies intending to list. Nasdaq declined to comment on specific actions.
A recent spate of wild market debuts, particularly from China and Hong Kong-based issuers, has attracted attention across markets. In one of the most prominent examples over the past month, little-known Hong Kong financial services firm AMTD Digital Inc. surged more than 32,000% to briefly outperform Goldman Sachs Group Inc. by market value, and then fell 97% from its August high. The stock is still up 785% since its IPO on the New York Stock Exchange in July. Addentax Group Corp. and Magic Empire Global Ltd. are also among the companies that have seen massive stock moves in trading.
US Securities and Exchange Commission Chairman Gary Gensler said last month that the agency was well-placed to investigate the causes of the unusual movements and find out what’s “going on behind the scenes,” though he couldn’t be certain Firms or prices expressed movements.
The heightened stock market scrutiny adds uncertainty to a number of upcoming IPOs, some of which were expected earlier this week. Planned IPOs include small deals at Hongli Group Inc., Lichen China Ltd. and Alopexx Inc. based in the USA. The size of their fundraising ranges from approximately $18 million to $33 million.
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A chain of smaller companies from Asia is still entering the US market against a drop in IPO activity. According to data compiled by Bloomberg, US IPO companies have raised about $22 billion this year, up more than 90% from the same period in 2021. Of the 185 newly listed companies, only six have raised more than $500 million.
(update stock prices at the end)
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