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Market again chases IPO's
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June 10, 1997: 3:57 p.m. ET
Upbeat sentiment, high-profile names sparking new interest in new issues
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NEW YORK (CNNfn) - Investors looking for value in the stock market have renewed their interest in new issues as a full slate of initial public offerings were set to bring this week's tally to a six-month high.
With at least 22 companies scheduled to price their offerings this week, Wall Street is estimated to raise $2.3 billion, according to CommScan's Equidesk, a track service of the research company.
Investor enthusiasm has been driven by the same upbeat sentiment that has sent broader market indexes to record levels. In addition, investors have an opportunity to chase some high-profile names such as "Polo," "Santa Fe" and "Iridium," analysts told CNNfn.
Yet, enthusiasm doesn't guarantee returns, some analysts warn. "It doesn't mean the quality is good. It doesnt mean the price is fair," said Manish Shah, publisher of the IPO Maven newsletter.
If the investment bankers can tap the capital markets for $2.3 billion, it would match the amount raised during the week of Nov. 18, 1996. The current record for 1997 was set in the week of May 19, when $2.1 billion was raised.
Among the issues contributing to the tally were two offerings priced on Tuesday: Santa Fe International Corp. and Iridium World Communications.
The Santa Fe IPO, which raised $997 million, was the largest offering since Compania Anonima Nacional Telefonos de Venezuela, or CanTV, which went public on Nov. 21, 1996.
Santa Fe, an oil services company that was spun off of Kuwait Petroleum Corp., priced its initial offering at 28-1/2, above its expected price range of 24 to 27. Also, the size of the IPO was raised to 35 million shares from 30, indicating stronger-than-expected demand. On its first day of trading, the stock (SDC) was up 3-3/8 at 31-7/8 on the New York Stock Exchange.
Not every new issue, though, is getting rave reviews from the critics. Iridium, a global satellite communications company, priced 12 million shares at 20. And, the stock was up 2-1/4 at 22-1/4 in Nasdaq trading.
However, the deal is still too speculative given the fact the company will need about $1.7 billion in additional financing to launch its network, said Ryan Jacob of the IPO Value Monitor.
"The question with Iridium is it's an infrastructure play," Shah said. "These things generally need more capital than is planned." (382K WAV) (382K AIF)
Still, interest remains in tact as evidenced by an offer from Peapod, the online grocery shopping and delivery service. The expected price range of the offering was raised to 15 to 16 from the 13-to-15 range.
In addition, analysts expect strong demand for Polo's 29.5 million shares, expected to be priced between 22 and 25 on Wednesday evening.
-- Robert Liu and Bambi Francisco
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