ISE Has Best Debut for IPO Since 2001
Wednesday March 9, 5:02 PM EST
WASHINGTON -- The International Securities Exchange Inc. (ISE) scored the best first-day performance for an initial public offering since 2001 on Wednesday, when it closed up 68.89% from its offer price.
The electronic options exchange opened 43% above its $18 offer price Wednesday morning, and spent the day trading ever higher, ending the session at $30.40.
Investors would have to turn back the clock nearly four years to get a better first-day debut, to May 2001, when semiconductor testing company Simplex Solutions Inc. rose 77%, according to Thomson Financial, which tracks IPOs. Simplex Solutions was later acquired by Cadence Design Systems Inc. (CDN).
ISE's IPO had been eagerly anticipated by a market that has had few public offerings from which to choose in recent weeks. The New York City options exchange, which was launched in 2000, is a dominant player in its market and has shown net income gains.
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"That deal was anointed," said Sal Morreale, who tracks IPOs for Cantor Fitzgerald LP in Los Angeles. "The market was starved for a good deal."
The strong close followed pricing Tuesday night at $18 a share, at the high end of its range. Earlier in the week, the ISE's price range was raised from a previous level of $14 to $16 a share, reflecting investor demand.
The ISE's debut comes at a time when many large IPOs are coming to market through private-equity buyout shops, which have loaded the companies with debt, depressing earnings and necessitating the use of large chunks of IPO capital to pay down the debt.
The ISE, in contrast, has seen its net income rise 30% in 2004 to $26.2 million, amid a recovery in equity markets and rising options volume. The 10 million shares offered to investors represents about 28% of the firm's total equity, with proceeds going toward expansion of the all-electronic exchange's products and services.
The ISE is the country's first standalone options market to go public, following the success of the futures-focused Chicago Mercantile Exchange Holdings Inc. (CME), whose stock has risen nearly sixfold in value since going public in late 2002. Besides the CME and the ISE, two other similar companies are publicly listed: Archipelago Holdings Inc. (AX), and the Nasdaq Stock Market Inc. (NDAQ).
Of the six options exchanges in the U.S., the ISE holds the leading market share, handling 30.8% of total options volume last year, according to the industry's Options Clearing Corp. Overall options trading volume has also been on the rise in the past five years, with volume up 65%.
-By Lynn Cowan, Dow Jones Newswires; 202-862-3548; lynn.cowan@dowjones.com |
