Slowly we turn: The environment for raising money in the IPO market continues to show small–repeat, small–signs of improvement.
Buoyed by a 14.2 percent surge in the Nasdaq and 8.6 percent gain in the Dow Industrials in November, 12 companies went public last month. That made November the second most active month for IPOs in 2001.
Those numbers need to be kept in perspective, however. Issuers in November only raised $116 million per offering — hardly mega-deals. Nevertheless, the November IPOs did fare well. On their first day of trading, the share prices of each of the 12 offerings climbed an average of 15 percent.
And December is expected to be better, albeit slightly. All told, 13 companies are expected to go public this month. By comparison, only 8 companies went public in December 2000.
Observers say the real IPO action will take place next week, when 9 companies in six different industries should come to market with offerings. That group will be led by Prudential Financial, which is expected to raise about $3 billion. That amount will no doubt raise the per-IPO average slightly above the $116 million average recorded in November.
A couple of interesting offerings are on the IPO menu this week:
Aluminum Corp of China Ltd. (Chalco), the world’s third-largest aluminum refiner and China’s largest aluminum producer, is set to go public. The company, which was created just two months ago, will be listed in both New York and Hong Kong. Chalco management hopes to raise $480 million with the IPO. The global deal is being led by Morgan Stanley and China International Capital Corp.
Intra-Asia Entertainment Corp., another company based in the People’s Republic, is also slated to launch an IPO in the United States this week. In case you’re taking notes, Intra-Asia manages and controls Weifang Fuhua Amusement Park, a large amusement park located in the city of Weifang in China’s Shandong Province.
Managers at Lawson Software Inc. plan to take that company public this week. The Lawson offering is receiving extra attention in the press — including this write-up — because it is the first IPO candidate in months to actually talk up its Internet business. Lawson Software develops software for management and E-commerce applications. Company management is looking to raise up to $205 million in the financing, led by Lehman Brothers and J.P. Morgan. Lawson is the last Internet-related company to go public since Convergent Group Corp., which launched an IPO in July 2000. Time flies when the market stinks.
Lawson was founded back in 1975 and is reportedly approaching profitability. Nonetheless, company management recently lowered its anticipated pricing for the IPO down to around $14 per share from $16. The Lawson offering could serve as a benchmark for the technology sector, which has not exactly been lighting up the equity tote board of late.
Still, some analysts are expecting a rebound in the high-tech IPO market. “Investors are looking at earlier-stage and higher-growth companies,” Doug Fawell, head of equity capital markets at UBS Warburg, told Reuters news service. A successful Lawson IPO might lead managers at other privately held tech companies to test the public market waters. That, of course, would be swell news for venture capitalists, many of whom have been stuck with their investments in Internet and E-commerce companies.
In other IPO news:
- Management at Northwest Biotherapeutics Inc., a biotechnology specialist, lowered the anticipated price range on the company’s upcoming IPO to $8 to $10 per share from $9 to $11. Underwriters for the planned offering include C.E. Unterberg, Towbin, Fahnestock & Co. Inc. and Roth Capital Partners LLC.
- Military contractor United Defense Industries Inc. plans to offer 21.1 million shares for $18 to $20 per share. If that price range holds, the company would pull in about $400 million. The Arlington, Virginia-based company produces combat vehicles, artillery, and missile launchers. United Defense plans to sell 9.25 million shares while stockholders, including TCG Holdings LLC, would sell 11.85 million shares. The company’s major stockholder is the Carlyle Group, a private equity specialist.
Tracking Stock Redux
Management at Loews Corp. announced plans to issue tracking stock for its tobacco subsidiary. According to a company press release, the New York-based conglomerate hopes to issue up to $250 million worth of stock for what would be called the Carolina Group.
Salomon Smith Barney and Morgan Stanley are set to lead the offering. A time — or price range — has yet to be set, however. And the Loews offering is certainly something of an oddity. Tracking stock rose in popularity during the Internet boom, but it’s been 19 months since any company’s issued tracking stock.
Indeed, issuers have been choosing to carve out subsidiaries rather than create tracking stock. In fact, three-quarters of all money raised this year in the IPO market has come from equity carve-outs. With a tracking stock, a company can provide investors with access to a “pure play,” but management still maintains control of the assets.