Several IPOs Await Calmer Market
Companies hoping to float new stock offerings, including agricultural giant Monsanto Co. and Chinese oil firm Sinopec, are on pins and needles in the wake of last week’s dramatic market volatility.
After plummeting from Monday through Thursday last week, the Nasdaq composite index surged 7.9% on Friday, its second-biggest one-day point gain ever.
As the market tumbled for much of the week, many companies shelved plans for initial public offerings or slashed terms of the deals.
Only five of about 15 IPO deals tentatively scheduled to begin trading last week actually ventured onto Wall Street, according to financial data site WorldFinanceNet.com.
Some of the companies that did come to market faced sharply reduced deals. Gene therapy firm Introgen Therapeutics Inc. (ticker symbol: INGN) sold 4 million shares at $8 each, the bottom of its expected range. Software firm Synplicity Inc. (SYNP) sold 4.3 million shares at $8. It had hoped to get as much as $12 a share.
By Friday’s close, investors who took a chance on those two issues at the offering prices were rewarded: Introgen closed at $10.44 on Friday; Synplicity closed at $14.
“I suspect with this exceptional volatility in the market right now companies that don’t have to come to market may choose to wait until there is more stability,” said Christopher Ely, co-manager of Loomis Sayles Small-Cap Growth Fund. “I would not be surprised if we saw some back off despite the rally” on Friday.
Among the firms that withdrew planned IPOs last week were software maker YouCentric Inc., broadband services provider B2 Bredand and biotech firm Drugabuse Sciences Inc.
Almost 180 companies have withdrawn or postponed IPOs so far this year, versus just 131 in all of 1999, according to research firm Thomson Financial Securities Data.
Among the deals that might test the waters this week is an IPO from Monsanto. The maker of herbicides, seeds and related products became part of drug giant Pharmacia Corp. (PHA) in a merger earlier this year.
Now, Pharmacia wants to spin off about 14% of Monsanto to the public. The shares are expected to be priced between $21 and $24 and trade under the symbol MON.
Another deal expected to begin U.S. trading this week is the stock offering from Sinopec, whose formal name is China Petroleum Chemical Corp. The company explores for oil and gas in China and also refines and markets gasoline.
Though high oil prices might be expected to give a boost to the offering, Sinopec is China’s largest refiner, and thus suffers from higher costs as crude prices rise.
The stock is expected to begin U.S. trading at $20.65 a share this week.
