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Non-Tech : Wit Capital - The way of the future? -- Ignore unavailable to you. Want to Upgrade?

To: eDollar.com who wrote (5888)	6/29/1999 11:47:00 PM
From: Lao Ou	Read Replies (1) \| Respond to of 16809

From thestreet.com Brokerages/Wall Street: The Big Get Bigger in Internet IPO Underwriting By Gregg Wirth Staff Reporter The Internet IPO market may have created some new stars this year, but it's still dominated by the same old underwriters. The top triumvirate of IPO underwriters -- Goldman Sachs (GS:NYSE), Morgan Stanley (MWD:NYSE) and Merrill Lynch (MER:NYSE) -- bolstered their lead, grabbing about 55% of the IPO dollars raised in the year's first six months, according to Thomson Securities Data. That compares to a combined market share of about 35% for the first half of last year. (TheStreet.com took a look at how these three investment banks rule the IPO market in a story earlier this year.) The three added to their lead during a blistering market for new offerings. Through June 29, companies raised $24.3 billion in 217 IPOs, up 27% from the year-earlier period when $19.1 billion was raised on 259 deals. Deal size grew to an average $112 million per IPO, compared to $74 million last year. While some blockbuster-sized deals did get done so far this year, the growth in the average IPO size reflects investors' willingness to accept higher per share prices and a larger number of shares being sold. Recently, however, the IPO market has showed signs of cooling. Investors have become much more picky, still pushing up some Net IPOs to dizzying heights but letting others sink below their offering prices. Meanwhile, nontech IPOs have floundered. The rankings compiled each quarter by Thomson Securities Data carry a lot of weight on Wall Street, where a firm's good numbers are referred to almost as often as a rival's poorer showing. And with potential clients, which value such measurements when choosing an investment bank, the rankings are a shorthand way of determining who holds the power on Wall Street. "It's pure marketing value and bragging rights," says Hal Schroeder, a brokerage analyst for Keefe Bruyette & Woods. "Issuers want to see who has done more brain surgery -- they don't want to go to someone who has only done it once." The rankings are less of a concern to industry analysts, Schroeder explains, although some may use the rankings as a barometer of future earnings health for firms since IPOs generally carry a hefty 7% underwriting fee, the large part of which is taken by the lead underwriter. But he adds that swings in trading profits can affect a firm's bottom line more. The largest gainer among the underwriters was Goldman, which increased its market share to 25% of all IPO capital raised in the first half of the year, compared to 14.4% for last year's comparable period. (Goldman was the lead underwriter of TheStreet.com's (TSCM:Nasdaq) recent IPO.) Goldman raised about $6.1 billion in IPO proceeds -- of course, about one-third of that was for its own IPO in early May. Goldman officials were unavailable for comment. The top four banks in the rankings remained the same, with Credit Suisse First Boston taking the fourth spot. Last year's fifth place underwriter at the mid-year point, Salomon Smith Barney, dropped to 10th. Solly's total underwriting volume decreased by more than 60%, and its market share dried up from 7.3% to 2.3%. James Cowles, Salomon Smith Barney's head of global equity capital markets, acknowledges the decline, but says Solly's overall equity underwriting, including secondary offerings and equity-linked convertibles, is up 34% so far this year. Of course, the rankings pose the question, can past performance foreshadow future good times? At least for now, there is no shortage of available work. "There's a backlog of a 100-plus deals waiting to get done," says Scott Sipprelle, president of Midtown Research, an independent IPO research firm. "But the market's wobbly, mutual fund inflows are down and issuers are getting nervous." The result is twofold, Sipprelle explains: More companies, especially Net companies, are rushing to the IPO market while the market is willing, but not all are doing as well as Net IPOs did earlier this year. There have been about 80 new Internet IPOs that filed to go public in May and June alone. "Strong deals are getting done, and others are getting left on the launching pad," Sipprelle says. If this trend continues in the year's second half, it may be the latecomers to the party -- those companies filing for IPOs now -- who get left behind.