Discount Broker Raises Size of IPO by 31%
Discount brokerage TD Waterhouse Group Inc., on Tuesday upped the size of its stock offering by 31% to $1 billion, indicating that investor demand for online brokerage shares is still high, according to people close to the deal.
The unit of Canada’s Toronto-Dominion Bank plans to sell 42 million shares at $24 apiece. The offering values TD Waterhouse at $9 billion. The New York-based company earlier this month said it would sell 32 million shares for $20 to $24.
Online brokerage stocks have slumped in recent months, in part because of worries that the industry cannot keep up its phenomenal growth rate in trading activity. The stocks, which had lost more than half of their value on average, have rebounded a bit but many are still down around 40% from their April highs.
Investors still have an appetite for online brokers and ordered “significantly” more Waterhouse shares than are available, people close to the deal said.
Analyst Randall Roth of Renaissance Capital’s IPO fund said he expects the shares, whose ticker symbol is TWE, to start trading today at a “healthy” premium to the offering price.
The results were mixed, however, as several other initial public offerings were priced or started trading Tuesday:
* Internet magazine Salon.com’s shares landed with a thud, dropping nearly 5% in their debut. The stock, trading under the symbol SALN, slipped 50 cents to close at $10 as more than 2.6 million shares were traded on Nasdaq. San Francisco-based Salon, which covers subjects ranging from politics to technology to literature, had priced 2.5 million shares at $10.50, the bottom of its expected range. Salon was the second company to go public using lead underwriter W.R. Hambrecht & Co.’s OpenIPO, a Dutch-auction bidding format. The firm launched the format in April when it took Ravenswood Winery Inc. public, and those shares have remained virtually flat. Hambrecht’s OpenIPO method enables investors to bid on the stock online and aims to enable all those who want to be a part of a deal to get a fair shot.
* Shares of Ramp Networks Inc., the Santa Clara, Calif.-based maker of devices that let multiple users in a small office share the same Internet connection, surged 52% in their first trading day. The stock, whose ticker symbol is RAMP, jumped $5.75 to close at $16.75 as 7.5 million shares changed hands on Nasdaq, giving the company a market value of $336 million.
* A day after raising the expected size of its IPO, Ariba Inc. sold 5 million shares at $23. The Sunnyvale, Calif.-based provider of business automation software raised $115 million after selling the shares above the $20-to-$22 expected range (and well above its original $16-to-$18 range). Ariba, which will trade under the ticker ARBA, enables computer networks to automate the procurement of office equipment, maintenance supplies and other goods needed to run a company.
