<<Stock Sales Drop in First Quarter; Slowest Since 1999>> (Update2)
By Elisa Martinuzzi
04/02 06:06
London, April 2 (Bloomberg) -- Stock sales slumped 16 percent in the first quarter to $57.9 billion, the slowest start to a year since 1999, as investors shunned all but the most established businesses with stable earnings.
The quarter's biggest sale was Citigroup Inc.'s $4.3 billion initial public offering for its Travelers Property Casualty Corp. unit. Autoroutes du Sud de la France SA and the French government raised $2.3 billion selling shares in the toll-road company, the largest so far this year in Europe.
``Large companies and large floats of relatively stable businesses are things investors like to buy,'' said Jon Anda, head of global equity capital markets at Morgan Stanley Dean Witter & Co., which ranked ninth in underwriting shares sales, down from fourth in 2001. ``I don't see that weakening.''
Citicorp's Salomon Smith Barney Inc. investment banking unit was the top stock underwriter in the quarter, getting a boost from organizing the Travelers IPO, according to Bloomberg data. Goldman Sachs Group Inc., No. 1 in 2001, came second in the rankings, followed by UBS Warburg and Merrill Lynch & Co.
Bankers expected equity sales, which fell by a third last year, to pick up after stock prices rose 10 percent in U.S. and Europe in the final three months of 2001. With the Bloomberg European 500 Index and other benchmarks still 25 percent lower than their highs in 2000, many companies aren't selling stock.
German lender BHW Holding AG and one of its largest shareholders called off a $1.3 billion stock sale in February hours before trading was slated to begin. The price demanded by investors ``didn't reflect the true value of the company,'' BHW spokesman Norbert Esser said at the time.
IPOs Hit
IPO volumes were hardest hit. In Europe, the value of initial offerings dropped 45 percent to $5.4 billion, making it the worst quarter in four years, according to Dealogic, a research firm.
In Asia, IPOs fell by about 43 percent to $3.5 billion. Sales of shares by listed companies also shriveled in Asia, with total equity offerings in the region falling by 47 percent to $10.4 billion.
Sales by U.S. companies, including IPOs and secondary offerings, slumped 9 percent to $23.9 billion. European share sales were down 8 percent overall to $19.9 billion.
Some companies that couldn't sell stock offered convertible bonds instead, taking advantage of record low interest rates while potentially increasing their equity.
Convertible Bonds
Sales of equity-linked securities, at $39.2 billion, were higher than secondary share sales and rose 6 percent from the same period last year with record offerings in the U.S. In contrast, sales of equity-linked bonds in Europe, including the U.K., fell by 58 percent to $6.3 billion.
Merrill Lynch, the top underwriter of equity-linked bonds, and Morgan Stanley underwrote General Motors' sale of $3.3 billion of convertible securities. Ford Motor Co. sold $5 billion-worth of convertible preferred stock, the biggest-ever sale of an equity- linked security, in an offering managed by Goldman Sachs.
Secondary offerings will continue to outpace IPOs, bankers said.
``Some companies, especially in the telecoms sector, may be forced to sell stock over coming months to meet debt reduction targets,'' said Christian Meissner, co-head of European equity capital markets at Goldman.
Companies contemplating initial public offerings may be lured into selling stock by recent successes.
Autoroutes du Sud rose 6.8 percent in its trading debut last week. About 80 percent of all initial offerings this year are trading above their IPO price, according to Bloomberg data. This includes sales of companies in all exchanges, such as the U.K.'s Alternative Investment Market.
Internet Appetite
Investors are even showing signs of appetite for technology companies. PayPal Inc. shares have gained more than 30 percent since the provider of online payment services in February became the first Internet IPO in almost a year.
``Investors are more optimistic and more sellers, such as private equity firms, are deciding to go ahead with transactions,'' according to Matthias Mosler, head of European equity capital markets at Merrill Lynch.
Hicks Muse Tate & Furst Inc., Apax Partners & Co. and rival private equity firms are planning to sell shares of European companies worth as much as $13 billion over coming months. Yell Group Ltd., Britain's biggest phone directory publisher, and Alfa Laval AB, a Swedish maker of fluid controls and thermal heating equipment, are among companies preparing IPOs for the second quarter.
In the U.S., Colorado billionaire Philip Anschutz, is planning to take Regal Entertainment Group, a movie theater chain, public in a $345 million offering. Anschutz is also looking to sell Pacific Energy Partners LP, a western U.S. pipeline company, in an IPO.
Still, bankers warn that sellers need to be realistic about how much money they'll get for their companies.
``The key difference to years past is that investors won't buy anything at any price,'' said Goldman's Christian Meissner.
Top 10 managers of global share sales, First quarter 2002 Includes domestic and global offerings, IPOs, secondary share sales. Excludes rights offerings and funds.
Bank Amount Market Share
($ Bln) (percent)
1. Salomon Smith Barney 10.8 18.7
2. Goldman Sachs 6.5 11.2
3. UBS Warburg 4.4 7.6
4. Merrill Lynch 4.2 7.3
5. CSFB 4.0 6.9
6. Deutsche Bank 3.0 5.2
7. Cazenove 2.9 5.0
8. ABN AMRO 2.8 4.8
9. Morgan Stanley 2.5 4.3
10. Lehman Brothers 2.2 3.8
Total amount raised: 57.9 100.0
Top 10 managers of U.S. share sales, First quarter 2002
Bank Amount Market Share
($ Bln) (percent)
1. Salomon Smith Barney 8.5 35.1
2. Goldman Sachs 2.4 9.9
3. CSFB 2.4 9.9
4. Merrill Lynch 2.1 8.7
5. Morgan Stanley 1.8 7.4
6. Lehman Brothers 1.7 7.0
7. UBS Warburg 1.4 5.8
8. Deutsche Bank 0.7 2.9
9. Bear Stearns 0.5 2.1
10. J.P. Morgan 0.4 1.7
Total amount raised: 24.2 100.0
Top 10 managers of European share sales, First quarter 2002
Bank Amount Market Share
($ Bln) (percent)
1. Goldman Sachs 3.0 15.2
2. Cazenove 2.9 14.6
3. Deutsche Bank 2.1 10.6
4. UBS Warburg 1.8 9.1
5. Merrill Lynch 1.8 9.1
6. CSFB 1.6 8.1
7. Credit Lyonnais 1.2 6.1
8. HSBC 1.1 5.5
9. Salomon Smith Barney 0.9 4.5
10. ABN AMRO 0.8 4.0
Total amount raised: 19.8 100.0
Top 10 managers of Asian share sales, First quarter 2002
Bank Amount Market Share
($ Bln) (percent)
1. Salomon Smith Barney 1.4 13.5
2. UBS Warburg 1.1 10.6
3. Goldman Sachs 1.1 10.6
4. Nomura Securities 0.5 4.8
5. Bank of America 0.5 4.8
6. Daiwa Securities 0.5 4.8
7. Lehman Brothers 0.4 3.8
8. Merrill Lynch 0.4 3.8
9. J.P. Morgan 0.3 2.9
10. Credit Lyonnais 0.3 2.9
Total amount raised: 10.4 100.0>> end article |
