IPO Watch: Housing Capital Raises... IPO-esque? (BZH, HOV, ITB)

The dark side of investment banking beyond Initial Public Offerings usually revolves around secondary offerings and when companies raise capital via securities sales.  Generally speaking, these can offer investors a chance to get into a public company at discount prices.  The problem is that investors have to decide if the discount is worth the trouble.  We haven’t seen any good news out of the homebuilding sector in longer we can remember.  So what about when housing companies want to raise capital?

We have seen two S-3 filings from Beazer Homes USA, Inc. (NYSE: BZH) and Hovnanian Enterprises, Inc. (NYSE: HOV) for their subsidiaries to raise capital.

Beazer Homes has filed with the SEC to raise up to $750,000,000.00 in securities sales.  It lists the following securities in any combination: Senior Debt Securities, Subordinated Debt Securities, Common Stock, Preferred Stock, Depositary Shares, Warrants, Rights, Stock Purchase Contracts, Stock Purchase Units, Units, and/or Guarantees of Debt Securities.

Beazer’s use of funds is “for general corporate purposes ” which may include the retirement or refinancing of debt.  It also may temporarily invest those funds until used.

Hovnanian Enterprises filed for itself, its K. Hovnanian Enterprises unit, and subsidiaries.  They filed to sell up to $200,000,000.00 in any combination of securities sales of the following: Preferred Stock, Class A Common Stock, Depositary Shares, Warrants to Purchase Preferred Stock, Warrants to Purchase Class A Common Stock, Warrants to Purchase Depositary Shares, Debt Securities, Warrants to Purchase Debt Securities, Stock Purchase Contracts, Stock Purchase Units, and/or units.  For the K. Hovnanian Enterprises, Inc., unit, its grouping of securities can include any combination of Debt Securities, Warrants to Purchase Debt Securities, and/or Units.

Hovnanian’s use of funds are also “for general corporate purposes” including working capital needs, the refinancing or repayment of debt, capital expenditures, expansion of the business and acquisitions.

Again, these are not IPOs but are often considered the dark side of investment banking.  As you have not seen anything company come public tied to the housing sector in years, there is a chance that some of these securities sales could get as much attention as IPOs get.

Stay tuned.

Beazer is actually up 0.4% at $4.54 versus a 52-week range of $3.10 to $7.08.  Hovnanian is up 0.6% at $3.29 and its 52-week range is $3.26 to $8.05.  Maybe this dark-side of investment banking is really the good-side.

Even the iShares Dow Jones US Home Construction (NYSE: ITB) TF is trading up 0.3% at $13.44 against a 52-week range of $10.50 to $15.77.