IPO VIEW - IPO buyers grow picky as Dow gyrates
Reuters Story - November 09, 1997 15:51
By Mary Kelleher
NEW YORK, Nov 9 (Reuters) - A heady list of companies go
public this week, including film studio MGM and Friendly Ice
Cream , but investors will be fussy about which stocks
they buy in the face of global market turmoil.
"Investors are a lot more selective now," said Ken Fleming,
an analyst at Renaissance Capital Corp. "In September and
October, they took everything at offer...Now we will see some
big winners and some big losers."
World stock markets have gyrated violently after a
financial crisis in Asia caused rampant concerns about
corporate profits and global growth.
The swings have caused some companies to shelve public
stock offerings and they will make investors think twice before
buying stocks which have not yet taken the Dow's wild ride,
analysts said.
"The good deals will do very well and the bad deals will
probably be postponed due to market conditions," said John
Fitzgibbon, editor of IPO Aftermarket. "The market place has
changed in the past couple of weeks."
But there is still a lot for the prospective new issue
buyer to choose from, including several foreign telecom deals,
and many IPOs will draw nice premiums when they start trading.
"There are around 20 deals scheduled to come out next
week," said Vincent Slavin at Cantor Fitzgerald Co. "The
quality deals will always attract quality investors...90
percent of the coming deals will trade at a premium."
Fitzgibbon agreed, saying: "If the market doesn't catch a
case of the Asian flu, it could be another good week for
IPOs...Is the market starting to look frothy despite the cold
wind out of Asia? Yes."
Movie company MGM will go public this week, with 12.5
million shares offered in an expected range of $20 to $23 per
share. But analysts say it should trade higher.
Merrill Lynch was the lead underwriter.
Cantor's Slavin said his top choices for the week included
MGM, ice cream store chain Friendly Ice Cream Corp ,
Novacare Employee and Hybrid Networks Inc .
"These deals should all get premiums of at least a point,"
he said.
Montgomery Securities would lead the offering of about five
million Friendly shares, which was expected to price between
$19 to $21 per share.
Novacare, led by Robertson Stephens, would sell about 4.5
million shares in an anticipated range of $11 to $13 per share.
Hybrid would offer 2.7 million shares, with pricing expected
between $12 and $14 per share.
The public sale of a one third stake in Australian
telecommunications company Telstra Corp , and the
privatization of Hungarian telecom concern Matav, were eagerly
awaited by markets, analysts said.
"These are two very sizeable deals," Fleming said.
Hungary plans to offer a 20 to 27 percent stake in Matav,
and pricing is scheduled for November 13.
The state would sell 13 to 19 percent and the remainder
would be sold by MagyarCom, which owns 67 percent of Matav and
its a 50-50 partnership of Ameritech and Deutsche
Telekom .
"The Telstra deal is also rated very high," Fitzgibbon
said. |
