Shares of CBOT Rise 49% in Debut
Shares of CBOT Holdings Inc. shot up almost 50% in their first day of trading Wednesday, shrugging off concern that investors would shy away from the Chicago-based futures and commodity exchange after troubles at futures broker Refco Inc.
CBOT, parent of the Chicago Board of Trade, soared 49% to $80.30 from an initial offering price of $54. The deal price had been increased from an expected range of $45 to $49.
The stock’s gain was the fifth-best first-day performance of a U.S. initial public offering this year, according to research firm Dealogic, behind companies including Chinese Web search firm Baidu.com Inc. and online equity options market International Securities Exchange Inc.
CBOT, which operates the No. 2 U.S. futures and commodity market, on Tuesday sold 2.9 million shares to the public, raising $158.8 million. Selling shareholders offered an additional 251,003 shares.
CBOT said it planned to use the deal proceeds to improve its technology and for acquisitions.
The stock was expected to be well-received because trading in futures and other so-called derivative securities has been a booming business over the last decade. CBOT’s main rival, Chicago Mercantile Exchange Holdings, has been a hot stock since its debut in 2002, and rose $2.25 to $333.20 on Wednesday.
Business at the Board of Trade has doubled in the past three years as investors and traders used the futures and options markets to bet on, or protect against, price swings in bonds, commodities and other assets.
Still, some analysts had feared that CBOT would postpone its offering after financial woes at futures broker Refco, which filed for bankruptcy protection Monday.
But Bernard Dan, CBOT’s chief executive, said the Refco situation had helped his deal.
“It is about integrity, transparency and pricing and all the client protections that are in our industry, and that’s why I think the Board of Trade [price] range moved up,” he told CNBC.
Refco went public in August at $22 a share. The stock closed at 84 cents Wednesday. The company has suspended its chief executive, accusing him of hiding $430 million of debt.
Because CBOT sold a relatively small stake to the public -- about 6% of its shares -- analysts said follow-up offerings are likely.
“This is just a warm-up for a big secondary [offering],” said Francis Gaskins, president of IPO Desktop, an independent research firm in Los Angeles. “If they were serious about selling, they’d sell more than 6%.”
