IPO

So how bad is the IPO market?

Jim Kim — Thu, 28 Aug 2008 13:37:51 -0400

KBW says the IPO market held up well in June, but then fell off a cliff; August was the worst month since 1992, according to a Financial News Online article. On an annual basis, we're on track for the weakest market since 2003. (We should note the merger activity has fallen as well.) KBW reports that 292 IPOs have been pulled or postponed globally, which doesn't seem all that bad really, considering the state of the economy and the credit crunch. A lot of people will blame Sarbanes-Oxley, but that message is getting a bit tired. Right now, the liquidity and growth prospects just aren't there for a lot of companies. Long term, this may be healthy, as it sets IPO expectations at a more reasonable level.

For more:
- here's the article

What to make of KKR's plans to go public?

Jim Kim — Wed, 13 Aug 2008 17:51:06 -0400

We'll likely get more details about the Kohlberg Kravis Roberts "IPO" when the firm files an amendment to its registration filing later this month. So far, people are intrigued, to say the least, about the deal that seems like a reverse merger with its Amsterdam-traded affiliate. The goals are lofty: to appease shareholders of the poorly performing affiliate and raise new capital. TheDeal.com notes that the current terms call for existing KKR PEI shareholders to get 21 percent of the combined company, which should make them feel better about the near 60 percent drop in KKR PEI's share price on Euronext Amsterdam in 2006. Each KKR PEI shareholder will get a contingent value interest three years later if the shares are trading below $22.25, the current net asset value. KKR PEI holders really have little choice but to hope it all works out, or to sell now. I'm guessing more will choose to roll the dice on the new structure. Private equity will come back, we just don't know when.

For more:
- here's the article form TheDeal.com

Frank Quattrone laments lack of pre-IPO research

Jim Kim — Fri, 25 Jul 2008 07:57:46 -0400

Frank Quattrone, who famously beat a long government attempt to convict him of obstruction, is certainly back on the technology industry banking scene. At a recent conference, he lambasted Eliot Spitzer's efforts to separate banking and research, which included rules that apparently make it harder for sell-side analysts to work on pre-IPO companies. Quattrone also said top sell-side analysts have fled Wall Street for hedge funds and private equity because they can no longer get paid the way they could in the dot.com era. The dearth of VC-backed IPOs stems from a host of other factors. I'm not sure the lack of sell-side research at the pre-IPO stage ranks that high. The going-public bar is just so much higher now. In any case, Quattrone's Qatalyst Group seems to be faring well. It is currently advising Google in the Microsoft-Yahoo matter.

For more:
- here's an article in the San Francisco Chronicle

Alternative investment firms take lumps in aftermarket

Jim Kim — Tue, 24 Jun 2008 21:43:24 -0400

The window for an initial public offering closed pretty quickly for most alternative investment firms, which were lining up to follow the likes of the Blackstone Group, Och-Ziff and Fortress Investment Group. In hindsight, for the few that managed to sell their shares, it's unclear whether the IPO was a blessing or a curse. They sold their shares at a decent price, but the aftermarket, as Fortune notes, has not been kind. Fortress and the Blackstone Group are down about 50 percent, with Och-Ziff not far behind. Still, you have to wonder whether this is a buying opportunity. There are those who believe the worst is over and that the top alternative investors are laying the groundwork for a revival of sorts, via distressed funds for example.

For more:
- here's the article

IPO market stuck, who will feel pain?

Jim Kim — Sat, 31 May 2008 16:55:09 -0400

The flagging IPO market so far this year is a surprise. Now, that the SPAC segment is drying up, things look even more bleak. CNNmoney.com reports that just 6 companies have managed a deal this month (Renaissance Capital), down sharply from 32 companies a year ago in May. This, of course, hits all players, but none more so that Thomas Weisel partners. TheDeal.com notes that the firm lives and dies with high-tech IPOs, which are rare these days. So this may really mark the final chapter for the old Montgomery Securities, which seemed to live on via its star, the eponymous Thomas Weisel. You have to wonder what's in store for the firm.

For more:
- here's the article from TheDeal.com

Goldman Sachs' Liberty Lane SPAC still aiming for offering

Jim Kim — Tue, 27 May 2008 19:14:09 -0400

We noted in another item that the once white hot market for special purpose acquisition companies has really cooled of late. There just aren't enough deals to go around. This was unfortunate timing for Goldman Sachs, which jumped into the genre and was planning to take a SPAC called Liberty Lane public this week. As Dow Jones reports, the gilded firm ran into some turbulence, though it certainly has not given up. The initial public offering market is weak, in general, right now. That, combined with the difficulty in finding quality companies to buy likely will mean Goldman Sachs, even if it prices Liberty Lane, will not be doing much more in this arena for a while.

For more:
- here's the article

Private equity IPOs faring well

Fri, 09 May 2008 06:59:56 -0400

Most of us could use a bit of good news. How's this? According to Financial News Online, private equity backed initial public offerings have fared well over the past five years. In fact, they delivered average aftermarket gains of 25 percent, compared with 16.3 percent for non-financial sponsor-backed offerings. In 2007, the performance apparently widened. The best sponsor-backed deals came from Apollo Advisors, Goldman Sachs Capital Partners and the Blackstone Group, the article notes. Apollo's returns were a whopping 68 percent on average. It's unclear how things will turn out in 2008. The IPO market itself is reeling. The immediate aftermarket has been tough as well.

For more:
- here's the Financial News Online article

Citadel sees opportunity in tough times

Fri, 25 Apr 2008 06:59:56 -0400

It's a cliche that the real visionaries see opportunity in crises. But Citadel apparently sees a good chance to lock in talent. It has announced a string of hires recently that Financial News Online has noticed. The latest catch: Derek Kaufman, most recently the global head of fixed income in JP Morgan's proprietary positioning group, will join as head of fixed income. So what's going on? Well, the woes of investment banks are adding up, and many may be inclined to seek greener pastures. Hedge funds have long been seen as more desirable. But there may be another lure. There has long been chatter about a Citadel IPO. The rumor comes and goes. If CEO Ken Griffin were to offer shares, it would enrich a lot of executives who got in early. Just a thought.

For more:
- here's the Financial News Online article

ALSO NOTED: Shorts getting squeezed on Lehman Brothers stock; Morgan Stanley sells Outsourced Trading; and much more...

Fri, 11 Apr 2008 06:59:50 -0400

Company News:
> Morgan Stanley sells Outsourced Trading. Article
> Wells Fargo boosts credit line for SunPower. Article
> Shorts getting squeezed by Lehman Brothers. Article
> Bank of America to consolidate its health plans. Article
> Criticism of Citigroup's leveraged loan deal. Article
> Does Apollo's IPO make sense? Video

Industry News:
> Party over for investment bankers. Article
> More on term auction failures. Article

Regulatory News:
> Hedge fund group vows to fight regulation. Article

And Finally... The benefits of a powerful mentor. Article

Apollo Group to go public

Thu, 10 Apr 2008 06:59:57 -0400

You would have thought, in part because of the performance of the Blackstone Group in the aftermarket, that private equity firms that wanted to go public had given up on the idea. But the Apollo Group, run by Leon Black, remains bent on listing itself on the NYSE. It has filed for an IPO, aiming to raise $475 million, notes the New York Times. The firm's buyout fund apparently has delivered average annual returns of nearly 30 percent through the end of 2007. But it's taking a bath right now with some of its portfolio companies. Some will argue that there is wisdom in going public at the worst time, in that there's nothing but upside. You can bet other private equity giants are thinking much the same.

For more:
- here's the New York Times item

Related Articles:
Visa IPO a gravy train for top banks. Visa article
Benefits of private equity firm IPO are clear. IPO article
Buyout firms invest in own debt. Buyout firms article
Leon Black suffers most among PE kings. Leon Black article