IPO Year In Review: Mkt Disappoints Despite Strong 4Q
By Brian Coyle
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones), Jan 3 –The U.S. initial public offeringaftermarket closed out 2001 with a bang, as 32 offerings were priced in the fourthquarter, raising $11.06 billion.
This compares with 50 IPOs priced in the fourth quarter of 2000, raising $5.31 billion, according to Thomson Financial.
After closing out 2001 on a positive note, the potential IPOaftermarket for 2002 looks healthy, as spin-offs from establishedcompanies such as Verizon Communication’s (VZ) wireless unit, Citigroup Inc.’s(C) Travelers Property Casualty Corp. and Continental Airlines Inc.’s (CAL)ExpressJet Holdings Inc. prepare to come to market.
While the fourth quarter finished up with solid results, theoverall IPO market in 2001 was a disappointment. For the year, 98 IPOs werepriced, raising an estimated $36.05 billion in proceeds, according to ThomsonFinancial. For 2000, 384 IPOs came to market, raising roughly $58.89 billion.
Overall results for 2001 were down significantly from the pastfew years. IPOs in 2001 checked in with the lowest year for proceeds since1995, when 574 IPOs raised $32.6 billion. The year also marked the firsttime there weren’t at least a hundred IPOs in a year since 1979, when 62IPOs were priced.
In 2001, no IPO doubled its offering price in its first day oftrading. The nearest in 2001 was Simplex Solutions Inc. (SPLX), whichmakes software for integrated circuits, which rose 77% in early May. Theyear marked the first time since 1995, that there wasn’t a first-day doublefor an IPO, according to Thomson Financial.
Technology issues are expected to regain some momentum in 2002
after finishing up with solid returns at the end of 2001.
Francis Gaskins, Editor of IPOdesktop.com, said he believes the
market is back on track for a “normal IPO market” in 2002, with neither
the “excesses of the bubble nor the doldrums that followed.”
Gaskins also noted that “some companies are whizzing through
the IPO process in less than 60 days, so the backlog of IPOs is less of an
indicator of future activity than it once was when companies spent more time in
There are 31 IPOs on backlog for 2002, seeking to raise an estimated $8.2 billion
in proceeds, according data from Dealogic CommScan. This compares with 154
IPOs that were waiting to go public at the beginning of 2001. Of the 154 IPOs
planned for 2001, only 91 made it to market last year amid turbulent market conditions.
In mid-January, look for several health-related issues to kick-off aftermarket
pricing as Alliance Medical Corp. and Ribapharm Inc. plan to sell their initial shares.
Alliance Medical plans to sell 4 million shares at $14 to $16 a
share, while Ribapharm plans to offer 18 million shares at $13 to $15 a
share. Both deals will be done through lead underwriter UBS Warburg.
After a somewhat lackluster year for IPOs in 2000, the market
for new company listings in 2001 once again mirrored the overall stock
market’s poor performance.
For the year, the Dow Jones Industrial Average (DJIA) dropped
7% to close at 10021.50, marking the second consecutive year in which the
indicator fell. In 2000, the DJIA gave up 6.2%, compared with gains of 25% in
1999 and 16% in 1998.
Other stock market barometers also recorded significant losses
in 2001, with the tech-laden Nasdaq Composite Index falling 21% to close
at 1951.02, after plummeting more than 39% in 2000. The Standard & Poor’s
500 Stock Index declined 13% to close at 1148.16 for 2001.
IPOs Rebound In 4th Quarter
Despite lackluster performance in the IPO aftermarket throughout the year,
the fourth quarter finished up strongly, with several large offerings.
The year-end resurgence in offerings came as the IPO market had a
revival in performance in the wake of the September 11 terrorist attacks.
The September 11 attacks, combined with unpredictable market
conditions, caused a more than month-long drought in IPO pricings, the
longest such period in the last 25 years. When the IPO market returned
in October, however, the offerings began to outperform those deals priced
before September 11.
Prudential Financial Inc. (PRU) checked in with the largest
offering of the fourth quarter and the third-largest of the year, raising more
than $3 billion in proceeds through Goldman Sachs & Co. and Prudential Securities.
Other significant offerings in the fourth quarter included
insurance company Principal Financial Group Inc. (PFG), which raised $1.85
billion, reinsurance company Converium Holding AG (CHR), which raised $1.84
billion, and managed care provider Anthem Inc. (ATH), which raised $1.73 billion.