Boutique investment bank Evercore Partners faces tough odds as it prepares for an initial public offering Thursday amid market turbulence that has already forced another investment bank to withdraw IPO plans. "I think the well has been poisoned to a certain degree," said David Menlow, president of IPOfinancial.com.
Amid a frothy merger and acquisitions and underwriting market which has boosted many established investment banks' earnings to record levels, a number of their smaller rivals have rushed to cash in.
Among the most succesful was Thomas Weisel Partners Group Inc, which went public in February at $15 and rose 33 percent to $20.37 in its debut.
But rockier markets and higher interest rates have dampened optimism about Wall Street firms' growth prospects, and Thomas Weisel's shares have since surrendered most of their early gains, trading at $15.52 late Friday.
Cowen Group Inc, which was spun off from French bank Societe Generale, followed in July, but priced below its forecast range at $16 and traded Friday at $15.57.
BankAtlantic Bancorp Inc later delayed the IPO of US brokerage Ryan Beck Holdings Inc.
Investment banking and brokerage firm Keefe, Bruyette & Woods Inc, which scratched plans to go public in 1999, also announced plans for an IPO in May.
The company has not filed for an offering with the US Securities and Exchange Commission, but is still moving forward on its IPO plans, a company spokesman said.
To be sure, some investment bank IPOs have done well. Last year, Lazard Ltd went public and traded Friday at $41.14, up about 65 percent from its $25 offering price.
Greenhill & Co Inc, which debuted in 2004, priced at $17.50 and traded Friday at $57.74, up about 230 percent.
Difficult market conditions prompted by concerns about inflation and interest rate hikes among other factors, caused two companies to withdraw or postpone scheduled IPOs in the first week of August, 10 companies in July, and 39 companies on the year, according to data tracker Dealogic.
Of the 15 companies that made it to market in July, five priced below range, according to Dealogic.
Despite the difficulties, a number of investment banks are pursuing IPO plans, said Scott Gehsmann, North American Leader of PricewaterhouseCoopers' Global Capital Markets Group.
Led by former US Deputy Treasury Secretary Roger Altman, Evercore Partners has advised on more than $300 billion in announced deals over its 10-year lifespan and grew revenue to $125.6 million in 2005 from $46.0 million in 2001, according to its prospectus. The New York-based firm plans to float 3.95 million shares at between $18 and $20 per share and trade on the New York Stock Exchange under the ticker symbol "EVR".
German chipmaker Qimonda's IPO is set to price on Tuesday in an offering that could be the year's second-largest.
Despite the broad market challenges, Qimonda is on a roll, after climbing to second place in market share for sales of dynamic random-access memory chips (DRAM) during the first quarter and a stronger-than-expected second quarter for the DRAM market at large, said iSuppli memory analyst Nam Hyung Kim.
Qimonda's IPO is potentially worth up to $1.3 billion, if priced at the top of range, and could value Qimonda at up to $5.4 billion; the company, being spun off by Infineon expects to trade on the New York Stock Exchange under the ticker symbol "QI".
The largest IPO of the year to date was MasterCard Inc's $2.58 billion deal.
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