jim and all, I think we need to be aware that energy IPOs are closing the gap with tech IPOs as the most profitable to investment bankers. I expect more hype on energy stocks as they distribute them.
Business Week:
>MAY 14, 2001
The Energy Crunch
Energy IPOs: A New Blockbuster on Wall Street
Energy IPOs, and the banks underwriting them, are red-hot
Hugh McGee, co-head of Lehman Brothers Holdings Inc.'s global energy practice, is busier than ever. McGee and his team of 45 bankers are working weekends and nights. They're canceling vacations. And they're hitting the road to deliver a simple message to energy company CEOs: Dot-coms are out. Power is in. "We're telling them that it is a favorable environment for getting transactions done, and the financial markets are wide open," McGee says.
Welcome to the latest new new thing on Wall Street. So much for the tech boom; like McGee, legions of energy bankers are drilling for deals these days. And many are striking it rich. On May 1, Reliant Resources, a Houston power generating and trading spin-off of utility Reliant Energy Inc., raised $1.56 billion. It was this year's third-largest IPO, after Agere Systems and KPMG Consulting Inc., respectively. Up 10% in two days, Reliant could also climb to the ranks of this year's best-performing IPOs. Already, shares of Williams Energy Partners have soared 55% since its February offering.
THE RUSH IS ON. All told, Wall Street raised a stunning $3.6 billion for energy companies, including Reliant, Allegheny Energy Inc., Calpine, and Aquila Inc. in a spate of initial, secondary, and convertible equity offerings over the seven days ended April 30. "This is the strongest equity market for new issuance that I've ever seen" for energy companies, says Doug Kimmelman, chairman of Goldman, Sachs & Co. global energy investment banking group.
The reason: With America on the brink of its worst energy crisis in a decade, the long-shunned oil and gas business is gushing profits, making it suddenly sexy to investors and bankers. Players ranging from oil company Anadarko Petroleum Corp. to independent power producer Calpine Corp. are racking up record earnings. "Energy has replaced technology as investors' favorite sector," says Richard Peterson, chief market strategist at Thomson Financial Securities Data Corp.
Indeed, energy is now one of the few sectors still greasing Wall Street's wheels. In the first four months of this year, Wall Street earned almost as much in fees from issuing equity for oil, gas, and utilities as it did from technology companies over the same period. Investment bankers pulled in $266 million in disclosed fees from issuing equity for oil, gas, and utilities vs. $351 million from technology issues.< [snip]
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PS: BW forbids posting the whole article but has a link for me to e-mail it to anyone.
Gottfried |
