Hunger for IPOs Sends UPS Shares Soaring in Debut
The frenzy for new stocks made for a dramatic debut Wednesday of United Parcel Service’s initial public offering, pushing the delivery giant’s shares up $18.25 to $68.25 on the New York Stock Exchange--and adding a fast $22 billion to the company’s market value.
The sale demonstrated that even the 109.4 million shares offered to investors by UPS wasn’t nearly enough to satisfy demand in a market that continues to crave fresh ideas.
Investors’ hunger for IPOs is, in fact, a global phenomenon: Italy just made history with the biggest IPO ever, as electric utility Enel raised $18 billion by going public. In Britain, investors on Wednesday snapped up shares of Thus PLC, Scottish Power’s Internet unit.
On Wall Street, UPS’ sale was by far the biggest U.S. IPO ever: It raised $5.47 billion, thus eclipsing the previous record $4.4 billion raised by oil company Conoco in 1998.
But investors have found the cash to finance more than just UPS in recent weeks. Cable TV giant Charter Communications raised $3.2 billion Monday, in the fourth-largest IPO in U.S. history.
Expedia Inc. (ticker symbol: EXPE), Microsoft’s online travel Internet site, sold 5.2 million shares at $14 each Tuesday, raising $73 million. The stock soared $39.44 to close at $53.44 on Nasdaq on Wednesday.
Many other IPOs also have grabbed investors’ interest--and dollars--over the last month, including World Wrestling Federation, Martha Stewart Living Omnimedia, online grocer Webvan Group and online ticket vendor Tickets.com.
Investors’ willingness to snap up these shares is, of course, largely fueled by their expectations of fast short-term gains.
In UPS’ case, plenty of investors who got the stock at the issue price of $50 turned and sold Wednesday: More than 80 million shares changed hands on the NYSE. The stock traded as high as $70.31.
“It was a good move,” said Andres Maturana, a 31-year-old UPS driver in New York who owns stock in the company he has worked for 11 years. “I just hope we continue to do well in the future. I am looking forward to UPS stock going higher.”
But the interest in IPOs also speaks to investors’ basic willingness to entertain new ideas--a function, in part, of the prosperous economy, analysts note.
“Right now, the IPO market is at a high pitch. We have a lot of deals in the pipeline. Anything related to a big name, the Internet or technology is going to moonshot right out of the gate,” said Jeff Hirschkorn, an analyst at IPO.com.
Investors were drawn to UPS stock because of the company’s familiar name, 92-year history and expectations its business could benefit from the electronic commerce boom.
Other deals that came to market Wednesday:
* Next Level (NXTV), a broadband communications systems provider, soared 154%, or $30.75, to close at $50.75.
The Rohnert Park, Calif.-based firm raised $170 million with its offering of 8.5 million shares.
“It’s one of those companies focusing on broadband and more specifically [digital subscriber line], so it’s going to get a lot of attention. The whole sector of broadband infrastructure is really a hot area, and there are no signs of it slowing,” said Steven Tuen, analyst at IPO Value Monitor.
* Internet telephony services firm IBasis (IBAS) surged 152%, or $24.25, to $40.25 on Nasdaq after its $16-a-share IPO of 6.8 million shares.
The Burlington, Mass.-based firm provides services that allow telecommunications carriers to offer international voice, fax and other value-added applications.
“The company is in a hot area right now,” said Paul Bard, an analyst at Renaissance Capital’s IPO Plus Aftermarket Fund. “There are relatively few [Internet protocol] telephony service providers out there, and [IBasis] realizes the importance of gaining the first mover advantage.”
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IPO Rush
Investors have thrown billions of dollars into a wide range of newly public companies in recent weeks, making for the largest initial public offerings ever both worldwide (Enel of Italy) and in the United States (UPS). A sampling of recent new issues:
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IPO Amt. raised Company date (millions) Enel (Italy) 11/1 $18,250 UPS 11/9 5,470 Charter Comm. 11/8 3,230 Webvan 11/4 375 World Wrestling 10/18 170 Martha Stewart 10/18 130 Pac West Tel. 11/3 126 IBasis 11/9 109 Tickets.com 11/2 84 Expedia 11/9 73 Wireless Facil. 11/5 60
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Source: Times research
