Pallas Air (formerly Lifa Air)

[Mistakesweremade]

My dad bought my mom one of those air purifiers you hang around your neck because of COVID. It’s been used very little, and that particular unit is either a lemon or the quality in general is just rubbish. The battery on this unit lasts at most an hour, and it drains quickly even when not in use.

In other words, if one were to bother wearing the device regularly, any potential benefit would be very marginal due to the unfortunate battery life, assuming the concept even works as intended. Then you’d still need to find a user willing to regularly wear such a noisy device humming on their chest. Fear might have sold some of these, but I doubt there’s any demand left, and those bought by now are probably gathering dust in a cupboard or have found their way to electronics recycling.

[Molskis06]

I strongly wonder why Lifan’s management doesn’t answer questions asked on the Forum??? Is this filtered communication and information? By answering, you could win over potential skeptics!
As the discussion shows, the CEO could have honestly stated in his answer how his subsidiary (he) sells shares and swallows the funds from the public offering. Shame on him.
The business operations before the COVID era were not mentioned?! What will be the Mäkipääs’ ownership percentage after the offering - approximately? As someone who understands something about ventilation technology, I would have hoped for more detailed evidence regarding the overall effectiveness of the neck-worn gadget in the vortexes of airflow? Even the mentioned VTT results? The CEO seems to be the center of innovation and business, a key person risk!
The COVID speculations could have been left out.

[Monnis]

Lifa Air’s IPO was not halted at the earliest possible stage due to oversubscription, i.e., today at 4:30 PM. That speaks volumes about investor interest.

[Real]

If the IPO fails, who pays the piper?

There could also be reputational damage for various parties involved, such as anchor investors and bookrunners, in any subsequent potential IPO.

[Musti]

https://www.inderes.fi/fi/tiedotteet/lifa-air-oyjn-listautuminen-first-north-markkinapaikalle-toteutetaan-suunnitellusti

Lifa Air offered a maximum of 3,000,000 Offer Shares for subscription in the IPO.

In the IPO, the Company will issue 2,255,356 New Shares, representing approximately 75.2 percent of the maximum number of Offer Shares in the IPO.

Trading in the Company’s shares (“Shares”) is expected to commence on Nasdaq First North Growth Market Finland (“First North”), maintained by Nasdaq Helsinki Oy (“Nasdaq Helsinki”), on or about April 20, 2022.

For those participating with a quick-profit strategy, this could be an interesting stock market start. Apparently (?), all subscriptions will be accepted in full, meaning many may get more than they actually aimed for, and at the same time, the price pressure is likely to be more downwards than upwards (as the offering fell short of the maximum and the buy side may be thin at the offer price).

[Baddan]

@Musti

For those who are in the dark, this could be an interesting stock market debut. Apparently (?), all subscriptions will be fully accepted, meaning many may get more than they actually aimed for, and at the same time, the price pressure is likely to be more downwards than upwards (since the offering fell short of the maximum and the buy side may be

It could also happen that the anchor investors realize they’ve drawn a blank, which could lead to a significant amount of selling pressure in the worst-case scenario. Just like with Nightingale. Miksi ankkurisijoittaja myi Nightingalea ison siivun heti listautumisen jälkeen? – ”Ei se tietenkään ole mikään ideaalitilanne” | Arvopaperi

[StockTycoon]

This is very much reminiscent of the outcome of NordicID’s offering. It also had a new product (the demand for which seemed weak) and revenue was mainly generated from outdated payment terminals. The offering was not fully subscribed and dropped almost 40 percent.

[Nordman09]

The target was 3,000,000 shares + 2,400,000 additional shares if there was demand. The result: out of 5.4 million shares, a little over 2.2 million shares were sold. Demand was weak, I’m guessing a minimum of -20% for the share price reaction on the first trading day morning. Trading starts on April 20, 2022, many quick-profit hunters will now be sweating over their share positions for a week.

What will be the situation with the corona in a year, nobody knows that today, largely dictates the future of this company.

[Rokkafella]

Subscription price 3.4 euros, current share price on the first day of trading 2.86 euros. It went as low as 2.21 euros.

It’s strange that the offering was not interrupted.

[Pohjolan_Eka]

@Rokkafella

The subscription price was 3.4 euros, and the share price on the first trading day is now 2.86 euros. It went as low as 2.21 euros.

It’s strange that the offering wasn’t suspended.

Why would the offering have been suspended? All willing participants were able to buy shares at the offered price of €3.4, and the company successfully raised a good sum of money from investors, which it can use for its future investment needs. Usually, it’s the other way around: investors get fewer shares than they wanted to buy at the offered price

Lifa Air has now successfully listed on the stock exchange, and the company’s shares can be bought or sold at the daily price. An investor can only blame themselves if they paid a ridiculously inflated price for the shares compared to their fair value. You can’t blame others for your own bad trades, can you?

[Rokkafella]

So cancel, not suspend

[Pohjolan_Eka]

Why cancel it when the company still received a significant amount of money from the listing, and all investors got the shares they wanted? The target amount might have been slightly overestimated, but this listing amount is certainly large enough to describe the listing as successful from the company’s perspective

[NEA]

Correct me if I misunderstood after quickly reading through the thread.

The owners sniffed out the opportunity of the decade when the numbers turned out beautifully for unforeseen reasons, and planned an arrangement by which the opportunity could be turned into profit for the (then) owners. Were investors fed an arrangement that didn’t explicitly state, “this is how some owners can realize value into their pockets before the situation normalizes”? The case had to be made attractive in terms of valuation so that a sufficiently large portion could be sold, i.e., the arrangement would be realized. Does money end up in pockets specifically through the subsidiary…?

So were the owners smart or foolish? Short-sighted or far-sighted?

@Pohjolan_Eka

this IPO amount is quite large enough that the IPO can be described as successful from the company’s perspective

I was wondering about this a bit, whether the IPO was successful from the company’s perspective, or from the perspective of some owners…

[make995]

Sometimes a picture tells a thousand words. I can’t crunch the numbers myself, but everyone can draw their own conclusions from this. The picture is from the Kauppalehti (Finnish financial newspaper) article I linked earlier.

[Enovene]

In similar cases, it usually happens that the company’s management, in a euphoria of success, invests and otherwise plays a bigger game than the firm’s actual resources would warrant. This is a company with a turnover of two, maximum three million, really. So it drives itself into a mine and it is very unlikely that it will survive without bankruptcy or corporate restructuring. There is no doubt that it will become a penny stock within a couple of years. It would go there almost immediately, but insiders are forced to protect their holdings from being wiped out by buying more when it falls.
The decline in the stock price itself should not come as a surprise if one has read, for example, this thread, which lists a long list of facts as to why there is no basis whatsoever for the company’s current valuation level at the time of listing. In addition, if the CEO blatantly lies “to your face” to investors publicly, is there any point in investing in such a company generally, whatever the numbers are.

[Molskis06]

What if the offering had to be carried out despite poor subscription rates, just to finalize the funding scheme between the main owner and the company? I’ll retract my speculation if this doesn’t happen.

[Musti]

@NEA

@Pohjolan_Eka

This IPO amount is quite large enough that the IPO can be described as successful from the company’s perspective

I was wondering a bit whether the IPO was successful from the company’s perspective or from the perspective of some of the owners…

Isn’t an IPO practically always done precisely in the interest of the old owners? The company is owned by its owners, and the decision to list specifically represents the owners’ view; the “company” is not independent of its owners. Even if there was no sale by old owners involved, but purely the collection of funds for the company for acquisitions, the goal is still to increase the value and wealth of the company (i.e., the ownership of the old owners).

For the sake of reputation and PR, it is often worth considering the interests of future owners during an IPO, but participation in IPO subscriptions is always voluntary, and the “terms” are stated in the IPO prospectus. This was also the case here, and the possible subsidiary maneuvering was clearly explained and discussed on this forum as well.

This might be a bit off-topic, but when participating in IPO subscriptions, it’s always worth considering why the company is listing at that particular time and under those terms. If the current owners could maximize their own benefit by keeping the company private, the company generally would not list (regardless of the flowery phrases in the IPO roadshow). Listing means that the old owners are somehow seeking a favorable outcome for themselves, and new potential owners must evaluate for themselves whether it is worth joining at the specified price and terms. The traditional “old owners not selling” vs. “cash grab offering” distinction is, of course, a bit too black and white.

@make995

Sometimes a picture tells more than a thousand words. I can’t crunch the numbers myself, but everyone can draw their own conclusions from this. A picture from the Kauppalehti article I linked earlier.

Regarding those wild future revenue targets versus past numbers, the company itself has quite clearly stated that they are based on an (IMHO) “double or nothing” strategy, meaning a sudden commercial breakthrough of something new. That is, a similar leap as came from the pandemic would be replicated with a new commercial breakthrough. The probability of this can, of course, be assessed either optimistically (the company’s own target) or realistically.

Lifa Air aims for an average annual revenue growth rate (CAGR) of 25–30 percent in the medium term. The company’s goal is to achieve a revenue of approximately 60 million euros by 2026. In the medium term, Lifa Air aims for an EBITDA margin of at least 20 percent and an equity ratio of 40 percent.

The company’s revenue target is mainly based on a commercial breakthrough of portable personal air purifiers and the expansion of the air purifier product segment into a more affordable price segment.

(Source: https://sijoittajat.lifa-air.com/lifa-air/taloudelliset-tavoitteet/ , bolding above is mine)

And as a disclaimer, I did not participate in the offering myself and will not touch this otherwise unless they truly demonstrate the ability for profitable growth without accidental pandemics. But I also don’t subscribe to hints that the company somehow defrauded those who participated in the IPO.

[Enovene]

@Musti

the company would have somehow defrauded those who participated in the listing.

-If it says that the management will not sell shares in connection with the listing, but still sells them, that is lying and defrauding both parties.

[Musti]

@Enovene

If they say that management will not sell shares during the IPO, but they still do, it is lying and cheating for both.

1. The management did not sell their ownership in the company being listed, but intends to sell to the company a share of a subsidiary in which the listed company was a minority owner.
2. I don’t know what was said or asked verbatim in some interview (i.e., the claim about lying), but this arrangement is now very clearly written in the prospectus (the only document an investor should actually read)..

Is this arrangement smart from the perspective of new owners? Not necessarily. Has the topic been circumvented in interviews by appealing to the fact that no share in the listed company is being sold in connection with the offering? Probably. Does such a thing weaken management’s trust? Probably. Was this somehow secret information? No, it was recorded in the prospectus with the euros.

(edit: I’m not saying that everything went ideally in communication. But that information has been as available as it can be)

[Enovene]

“1. The management did not sell their ownership in the listed company, but rather intends to sell the company a share in a subsidiary where the listed company was a minority owner.
2. I don’t know what was said or asked verbatim in some interview (i.e., the accusation of lying).”

“The company’s CEO mentioned in an interview with Kauppalehti that the company needs money, not the current owners.”