Investors Jump on 2 Initial Offerings
The depressed market for initial public offerings got a big lift this week amid strong investor interest in two deals.
Though analysts aren’t predicting a return to the wild IPO market of 1999 and 2000, hefty first-day gains for new stocks show investors are increasingly willing to look at fresh equity ideas.
One of the few hot areas for IPOs this year has been energy. That continued Friday, as Global Power Equipment saw its stock soar 57% on the first trading day.
The Tulsa, Okla.-based company, which designs and manufactures equipment for natural gas turbines used to generate electricity, priced its IPO at $20 a share late Thursday.
The stock (ticker symbol: GEG) ended at $31.45 on Friday on the New York Stock Exchange.
The company raised $147 million in the offering, selling 7.35 million shares in a deal handled by brokerages Credit Suisse First Boston and Salomon Smith Barney.
Global Power had fiscal 2000 sales of $417 million, a 51% increase from 1999. About 30% of sales came from General Electric, the biggest maker of gas turbines.
Global Power’s IPO benefited from President Bush’s energy plan, unveiled Thursday. The plan calls for rapid construction of new power plants.
“That was wonderful for us,” said Global Power Chairman Stephen Eisenstein.
Global Power’s offering follows last month’s IPOs of Aquila (ILA), an energy trader, and Reliant Resources (RRI), a power generator and energy trader. Those stock sales combined raised almost $2 billion.
A non-energy offering also was a hit Friday: Shares of Instinet Group (INET), the automated stock-trading network owned by Reuters Group, surged 22% on their first trading day.
Instinet priced 32 million shares at $14.50 each late Thursday. The stock rose as high as $19.50 on Friday, then closed at $17.65.
Instinet, an electronic market used by many big investors to trade stocks directly with each other rather than via the New York Stock Exchange or Nasdaq, is profitable, though it faces rising competition from other such networks.
Still, “if you’re a good-quality company and if you are the leader in your field, as Instinet is, then there is still appetite” for the shares, said Peter Lewis, head of global program trading at SG Securities in London.
Interest in the offering, which raised $464 million for Instinet, was viewed as an indication of what the Nasdaq Stock Market could expect when it goes public in 2002.
Instinet’s strength, analysts say, is a sales team with a long list of contacts among institutional investors developed over the years. The salesmen use these contacts to find buyers or sellers for securities offered on Instinet’s electronic trading system when the system itself doesn’t have a match for the order.
