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Redherring.com - November to remember brings 59 IPOs, raises $33.9 billion - 12/3/99 |
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November to remember brings 59 IPOs, raises $33.9 billion By John E. Fitzgibbon Jr. Redherring.com December 3, 1999 November 1999 was an IPO month to remember. A total of 59 deals were priced and traded, raising a record $33.93 billion. When compared with the other Novembers during the 1990s, the number of deals was nothing to write home about. For example, the busiest November on record was in 1993, when 100 IPOs were priced, according to the now-defunct weekly newsletter The IPO Aftermarket. Three other Novembers (1995, 1996, and 1997) generated over 80 offerings each. In fact, 1999 was the sixth most-active November in terms of offerings. But where November shines -- and sets records -- is in the dollar volume generated. November 1999 raised a record $33.93 billion in the IPO market. With underwriting fees running at the usual seven percent, Wall Street bankers earned about $2.38 billion for their efforts. November raised more dollar volume than entire-year volumes for all but five years in all of IPO history. A record year was 1993, when $57.86 billion was raised, but that amount has already been surpassed by this year's. As of November 30, investment bankers have priced $95.88 billion in underwriting 502 new issues during 1999. These figures include 11 "unit" offerings, which include common stock plus warrants. BIGGEST BIG DEALS Among November's deals were several giant offerings. The largest was the Italian electric utility, Enel (NYSE: EN). Enel was offered to U.S. investors as American Depositary Receipts (ADRs) traded on the NYSE. (Redherring.com counts foreign underwritings in its numbers.) Merrill Lynch (NYSE: MER) led a group of underwriters in pricing 363.75 million ADRs at $45.28 each, which raised $16.45 billion. As a huge non-tech deal, the stock has traded in a narrow two-dollar trading range since being priced on November 2. It finished the month at $43.94 a share. Several U.S. companies also raised billions in November's new-issue market. The largest American IPO ever was United Parcel Service (NYSE: UPS), with Morgan Stanley Dean Witter (NYSE: MWD) pricing its 109.5 million shares at $50 each to raise $5.47 billion. The stock closed the month at $66.06, up 32.1 percent from the offering price. The Charter Communications (Nasdaq: CHTR) IPO raised $3.23 billion. Goldman Sachs Holdings (NYSE: GS) priced 170 million shares at $19 each. The company is the fourth-largest operator of cable television systems in the U.S. The shares closed at $22.19 their first day in the market and finished the month at $23.19, up 22 percent from issue price. Agilent Technologies (NYSE: A) priced its 65 million shares at $30 each, raising $2.16 billion. For an IPO of this size, its stock did very well in the aftermarket. It closed its first trading day at $42.50 and finished the month at $42.19 a share, up 40.6 percent. Morgan Stanley Dean Witter acted as the book runner for the Hewlett-Packard (NYSE: HWP) spin-off. STUFFING THE BANK For investors that were able to get in on November's IPOs at the offering prices, it was a merry trip to the bank. The average first-day gain per IPO was 99.5 percent. And by November's close, the average gain per deal widened to 133.7 percent. Since most investors don't get the chance to buy an IPO until after it starts trading, however, it's valuable to look at the difference from the opening price. The average gain from opening price was a respectable 22.2 percent each. Not too bad considering that the Nasdaq Composite gained 12.5 percent for November. Of the 59 IPOs priced in the month, 36 came to market above their initial filing ranges. As the saying goes, "if an IPO's terms are increased, then double my order." The new issues that were increased before pricing scored an average first-day advance of 132.1 percent each against a 99.5 percent gain for all of the offerings. Nineteen deals were priced within their filing ranges and opened on average 43.2 percent above their issue price. For the four IPOs that were reduced in size, it was a far less rosy story. Once again, as the saying goes, "cut a deal, cancel my order." These underwritings barely managed to close above their offering prices -- their average gain was a paltry 3.7 percent gain per IPO. HALL OF FAME CHAMPIONS In November Redherring.com's Hall of Fame admitted 15 new members with qualifying opening-day gains of 100 percent or better from offer price. This impressive figure was the same number of members admitted the month before, in October. November's champions reinforced the notion that Wall Street considers Internet infrastructure and networking equipment companies to be among the hottest offerings. Cobalt Networks (Nasdaq: COBT), a developer of Internet-related application servers based on the Linux operating system, skyrocketed to close its initial trading day up 482.4 percent. The IPO was priced on November 4 at $22 a share by lead manager Goldman Sachs. It soared to close its first day of trading at $128.13. That was the third-best opening-day gain ever. The stock closed November 30 at $168.81, up 667.3 percent from the offering price. Finisar's (Nasdaq : FNSR) opening-day gain was not far behind. The stock leaped 357.2 percent to close November 12, its first trading day, at $86.88 a share, up from its offering price of $19. This gain is now the eighth best in Redherring.com's Hall of Fame. Underwritten by Merrill Lynch, the company provides fiber-optic subsystems for high-speed data communications over local-area networks (LANs) and storage-area networks (SANs). The stock closed on November 30 at $115.25, up 506.6 percent from its offering price. Scorecard, month of November Number IPOs priced (excluding units) 59 Number up 55 Number down 3 Number unchanged 1 Percentage gain From issue price 133.7 From opening price 22.2
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