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Underwriter leads IPOs
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December 22, 1997: 1:45 p.m. ET
Equity underwriting firm goes public, one of only two offerings for the week
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NEW YORK (CNNfn) - With only two weeks left in the year, the IPO calendar is heading into its annual quiet period, but at least one deal is expected to raise some eyebrows: Friedman Billings Ramsey & Co.
Best known for its own equity underwriting portfolio of offerings, Friedman has scrapped its original plans to debut in February and is rushing its $209 million offering forward to the last days of 1997.
In the current atmosphere of earnings warnings and market volatility, this decision might appear hasty. Not surprisingly, market conditions caused 70 percent of last week's prospective offerings to postpone their market debuts.
However, Friday's dramatic turnaround on Wall Street has underscored a willingness by the small investor to jump into any window that looks like it might contain profitable opportunity. By positioning itself as one of only two IPOs scheduled for this week, Friedman might just appear to be the newest sure thing on the market.
Another plus for the firm is that it already may be seen as a potential takeover candidate. Once listed, Friedman shares likely will take on a speculative takeover premium comparable to that enjoyed by many small publicly-traded brokerages like Hambrecht & Quist. As takeover prospects dwindled over 1997, shares of the remaining brokerages have surged an average of 77 percent.
Friedman's forte is specialty finance and real estate investment trusts, making it attractive to a bank or investment bank seeking an expanded presence in those areas.
Since its founding in 1989, the company has achieved a revenue growth rate of 50 percent compounded. Last year's posted sales were $109 million, nearly double those for 1995. Sales for the first 11 months of 1997 already have climbed above $218 million, yielding initial earnings of 61 cents per share.
In the underwriting industry, Friedman was ranked 15th among the major firms, leading 16 deals valued at over $2 billion. In the field of IPO underwriting, Friedman ranks 10th.
However, Friedman also has led the offerings of three real estate investment trusts in 1997, which have not performed as well for the year as the other REIT IPOs. This week, the company hopes to better its standings in the REIT market by taking Resource Asset Investment Trust public.
Resource Asset is expected to price at between $15 and $16, raising a total of $112 million. The newly-formed Maryland real estate investment trust is noteworthy for its practice of buying loans secured by real estate mortgages that don't conform to underwriting standards of institutional lenders. 
-- by Bambi Francisco for CNNfn Interactive
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