|
Last IPOs of '97 to debut
|
 |
December 15, 1997: 2:36 p.m. ET
But Asia's financial turmoil may cause some investors to steer clear
|
NEW YORK (CNNfn) - It's the last full trading week of the year, and equity underwriters will likely try to push as many deals out the door over the next five days as the market permits. But whether the 31 deals valued at $1.7 billion go public as slated seems a dim prospect as Asian turmoil deepens.
Says one maven in the IPO arena, Richard Smith, head of Nationsbanc Montgomery syndicate desk: "Buyers are back pedaling."
The tidal wave of crumbling confidence and financial defaults - courtesy of the Pacific Rim - has an outsize effect on IPOs as investors seek safety in more liquid, big-name stocks and U.S. government bonds.
The gloom became more pronounced last week when even the big-capitalization stocks took a major blow. The Dow Jones fell 3.8 percent, the Nasdaq composite lost nearly 6 percent while the Russell 2000, which is home to many smaller capitalized issues, fell 3.5 percent.
New issues that came to market however, did average more than a 4 percent return for the week. Whether those gains are sustainable remains to be seen.
CS First Boston takes home the prize for the biggest offering this week. Dollar Thrifty Automotive Group (DTG) is in the pipeline to raise $405 million with an $18 per share IPO. The company, which operates 833 car rental locations in the U.S. and Canada, is being spun off completely by its parent, Chrysler Corp.
Dollar Thrifty had $705 million in revenues and a loss of $147 million in 1996. But in the first nine months of this year, it has generated $652 million in revenues and a profit of $24 million. The Dollar Thrifty deals follows two successful offerings by rivals Avis Rent A Car and Hertz. Both went public this year, earning returns of nearly 100 percent and about 60 percent, respectively.
Just formed three months ago, United Rentals (URI) is tapping the equity market with an $80 million offering led by Merrill Lynch. The company rents and sells a broad array of equipment to the construction industry and homeowners. Its strategy is to grow by buying up the many independent smaller companies in this highly fragmented industry. Current, low interest rates should help that capital-intensive strategy, say analysts.
Another IPO with an acquisition-based strategy set to go public this week is Birner Dental Management Services (BDMS). The company, which claims itself to be the largest provider of dental management services in Colorado, is currently expanding into New Mexico. It is one of many dental practice groups going public this year, a trend that began with the offering of Coast Dental Services.
Yet again, the telecom industry will be represented this week with the offering of CrossKey Systems (CKEF). A Cowen & Company deal expected to price just over $10 a share for a total of $30 million. The deal is expected to be one of this week's better offerings. CrossKey is a software company servicing the telecom industry. Its software allows network managers to coordinate the various pieces of equipment hardware from multiple vendors.
Ned Davis, a portfolio manager at Roger Engemann & Associates, is positive about CrossKey's growth prospects. Although at $10, the stock will have a multiple of 35 times next year's earnings. Davis says the company has good visibility with expected sales of $38 million in calendar 1998 sales. That would be 76 percent higher from a year ago. Expectations for earnings per share in 1998 is 29 cents.
--by Bambi Francisco for CNNfn Interactive
|
|
|
IPO Monitor
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
