Wall Street in Busiest Week for IPOs Since Mid-May
After months of drought, it’s suddenly raining IPOs.
Wall Street is in the midst of the busiest week for initial public stock offerings since May 14, with six going to market in an effort to raise $900 million--including Weight Watchers International Inc. today.
The weight loss company and the other first-time offerings are taking advantage of a pickup in investor appetite for new issues after a big jump in stock prices in the last month and a half.
“The broader market rally is bringing more interest in the IPO market,” said Paul Bard, a senior analyst with Renaissance Capital’s IPO Plus Aftermarket Fund. That will help Weight Watchers “see some strong demand.”
Companies with well-known brand names, such as Weight Watchers, and those seen as relatively unaffected by the slowing economy, such as health care, are among those finding interest.
This year is on track to be the slowest for IPOs in more than a decade, with four in August, none in September, eight in October and just one so far this month--until this week. In February 2000, as many as nine companies a day were going public.
Since then, the market’s slide and the Sept. 11 terrorist attacks have curbed demand for new issues.
“There are more deals out there, but I hesitate to stand up and scream out that ‘It’s back!”’ said Stephen Tuen, manager of the Kinetics Emerging Growth Fund. “The deal flow is certainly not what it was, and we’re heading into Thanksgiving, which is basically the cutoff” for most IPOs.
The slump in IPOs, among the most lucrative of underwriting business, has helped push securities firms into their worst profit slump in five years. The firms have embarked on the biggest round of layoffs since 1994 to reduce costs in the face of sliding revenue.
Merrill Lynch & Co. (ticker symbol: MER) is firing about 15% of its investment banking staff this week, according to people familiar with the situation, in part because of the sharp drop-off in IPO underwriting.
The firings will include about 40% of the firm’s tech and telecom bankers and 15% of its financial institutions bankers.
All three companies that went to market Tuesday rose about 27% in their first day of trading.
Shares of San Diego-based AMN Healthcare Systems Inc. (AHS) closed at $21.66, up $4.66 from the $17 offering price. The planned price range was $14 to $16 a share. AMN, which sold 10 million shares and raised $170 million, is majority owned by the Haas Wheat & Partners buyout firm. It follows its biggest rival, Cross Country Inc. (CCRN), which went public Oct. 24. Cross Country shares have risen 37% since its sale.
Advisory Board Co. (ABCO), which provides temporary nurses to hospitals, closed at $24.25, up $5.25 from its offering price of $19, the top of its price range. Advisory raised $95 million through the sale of 5 million shares.
Fisher & Paykel Healthcare Corp. (FPHC), which raised $79.2 million, gained $4.95 to $22.95. Fisher & Paykel, spun out of New Zealand’s Fisher & Paykel Industries Ltd., the country’s No. 1 home appliance maker, sold 4.4 million American depositary receipts at $18, also the top of its range.
Weight Watchers, owned by privately held Artal Luxemburg, is seeking to raise $383 million by selling 17.4 million shares at $21 to $23. It will trade under the symbol WTW on the New York Stock Exchange.
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Other IPOs this week:
* DJ Orthopedics Inc. is planning to raise about $153 million. The company is offering 9 million shares at $16 to $18 each.
* Bam Entertainment Inc. is slated to sell 4 million shares at $8 to $10 through Jefferies & Co.
