IPO Alert: Here’s what to look for when CaliberCos goes public

The massive slowdown in the IPO market continued in the second half as the challenges posed by high inflation and interest rate hikes weighed on investor confidence. Meanwhile, there is much speculation about the outcome of the upcoming IPO of CaliberCos Inc., given the market’s not-so-encouraging response to recent public listings.

The asset management firm is looking to raise around $9 million through an initial public offering of 1.6 million shares. In a regulatory filing, the company last week set terms for the IPO – the offering price is expected to be between $5.00 and $6.00 per share. After securing regulatory approval, the stock will start trading on the Nasdaq stock exchange under the ticker symbol CWD. Revere Securities is the book-runner for the offering.

Use of Proceeds

Besides creating a public market for the company’s stock, the main purpose of the offering is to increase its capitalization and financial flexibility. The management intends to use proceeds from the offering for general corporate purposes, including working capital, operating expenses, and capital expenditures. A part of the proceeds will be used for acquiring complementary businesses, products, services, or technologies.

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Read management/analysts’ comments on quarterly reports

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Originally founded as Caliber Companies LLC in January 2009, the company was reorganized as CaliberCos, Inc. in 2015. It was co-founded by Jennifer Schrader and John Loeffler, who is currently serving as the chief executive officer. The company has been expanding its revenues in recent years and has started generating profit. Currently, it has a market cap of more than $190 million.

Biz Strategy

As a vertically integrated asset management firm, CaliberCos is on a mission to boost the wealth of investors looking to invest in middle-market assets. It creates and services proprietary products like investment funds, private syndications, and direct investments. The company operates through three segments — Fund Management, Development, and Brokerage. As a public entity, a key challenge facing it would be competition, both in investment opportunities and in attracting fund investors.

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Nevertheless, CaliberCos’ strong relationship with industry participants and sourcing network gives it an edge. The strategy is to avoid direct competition in saturated markets, rather the focus is on investment-friendly markets with a long-term trend of population growth and income improvement. The other positives are the vertically integrated platform that allows the use of in-house services for high margin, low volume tasks and focus on middle-market opportunities. As of June 2022, the company was actively developing 2,460 multifamily units, 2,300 single-family units, 2.5 million square feet of commercial and industrial, and 1.3 million square feet of office and retail.

Key Numbers

In the six months ended June 2022, CaliberCos reported total revenues of $42.9 million, which is up 86% from the prior-year period. It reported a net income of $19.7 million, compared to a loss of $10.6 million a year earlier. At $44.7 million, total operating expenses were up 32%.