On First Day of Trading, Lazard Shares Decline
Shares of Lazard fell on their first day of trading Thursday as underwriters including Goldman Sachs Group Inc. failed to keep the stock above its sale price.
The shares, priced at $25 late Wednesday, declined $1, or 4%, to $24 on the New York Stock Exchange. The American Stock Exchange’s securities broker/dealer index, which includes Lazard rivals such as Morgan Stanley and Lehman Bros. Holdings Inc., fell 0.4%.
“When you see it trading near the offer price like that, it means the underwriters are supporting the stock,” said Steven Rattner, a former Lazard vice chairman who’s now managing principal at New York buyout firm Quadrangle Group. “You normally want to see it go up 10%.”
The decline breaks a streak of first-day gains for investment banking partnerships that decided to go public. Greenhill & Co., the securities firm founded by mergers-and-acquisitions banker Robert Greenhill, rose 17% on its first day of trading on May 6, 2004. Goldman surged 33% on its first day six years ago.
Chief Executive Bruce Wasserstein is taking Lazard public at a time when many experts are skeptical the mergers-and-acquisitions market is poised for another boom.
Lazard raised $855 million in its initial public offering, selling 34.2 million shares at the low end of its $25-to-$27 pricing range. That valued the New York-based firm at about $2.5 billion.
Trading close to the IPO price is “not a good sign,” said fund manager Michael Binger, who helps manage $2.5 billion for Thrivent Financial. “When you can invest in Lehman or Goldman, why invest in Lazard?”
Goldman, which led the offering, Citigroup Inc., Lazard, Merrill Lynch & Co., Morgan Stanley, J.P. Morgan Chase & Co. and Credit Suisse First Boston earned $1.25 a share, or a total of $42.7 million, in underwriting fees, Lazard said in a filing Thursday with the Securities and Exchange Commission.
“Goldman Sachs is not going to let this deal fail,” said Sal Morreale, a sales trader at Cantor Fitzgerald & Co. in Los Angeles who follows new issues. “It’s too high-profile of a deal.”
Goldman spokesman Peter Rose declined to comment. Goldman shares fell 97 cents to $105.30 on the NYSE.
The IPO, the largest by a securities firm since Goldman’s in 1999, cements Wasserstein’s control over Lazard, which the family of Chairman Michel David-Weill founded in 1848 as a dry goods business in New Orleans.
Wasserstein, 57, had agreed to take Lazard public this year or quit. With the IPO completed, David-Weill will leave and share $1.6 billion with his allies.
At a meeting with potential investors last week, Wasserstein said Lazard was poised to capitalize on a mergers-and-acquisitions boom that may last as long as seven years.
Greenhill, which also is based in New York and employs about 130 people, raised $100.6 million a year ago. Its shares have jumped about 76% since then.
“Lazard may have a little harder time than Greenhill given that the [mergers-and-acquisitions] market has slowed down of late,” said Craig Smith, who helps manage $84 billion at David L. Babson in Boston. “They’re getting their ownership structure straightened out, but I don’t think they have the same momentum as Greenhill.”
Lazard had 2,399 employees at the end of last year.
Wasserstein and his family trust have 11.7 million shares of Lazard, now valued at about $300 million.
Lazard’s stock trades under the symbol LAZ.
