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$2B of IPOs due this week
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April 27, 1998: 11:22 a.m. ET
Ziff-Davis, Heller Financial lead parade of initial public offerings
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NEW YORK (CNNfn) - With 14 companies slated to float more than $2 billion in new stock on the market, this week's IPO action is certain to be quite a show in terms of sheer diversity and size of offerings.
Heller Financial, the commercial financial-services spinoff of Japan's Fuji Bank, this week expects to make one of 1998's biggest debuts. Underwritten by Goldman Sachs, the initial public offer has gotten better-than-average reviews from Renaissance Capital. Analysts expect the IPO to price at $24 a share, raising more than $800 million.
IPO watchers see Heller as a major player in the commercial-lending field, with a focus on small-business lending.
Heller's 79-year financial history shows a solid ability to grow earnings -- profits jumped 19 percent to $158 million last year, while new business volume increased 47 percent over the same period. After the offering, the company will have a stock-market value of more than $2 billion.
Comdex sponsor going public
Meanwhile, Morgan Stanley will serve as lead underwriter for this week's planned IPO from Ziff-Davis, the media and publishing giant best known for its PC Magazine and PC Week publications.
Market watchers expect the IPO -- one of the year's most highly anticipated and big-name offerings -- to price between $14 and $17 a share, raising $400 million.
The company is unusual for its dedication to computing and Internet-related technology, drawing 200,000 people a year to its Comdex high-tech trade shows, and also providing online content through its ZDNet Internet presence.
Experts think Ziff-Davis has all the makings of a hot deal, since the IPO market's hunger for any prospectus containing the word "Internet" seems insatiable. The IPO Reporter sees the issue quickly jumping $4, or 25 percent, above Ziff-Davis' IPO price.
One downside is that the company's Japanese parent, Softbank, has loaded Ziff-Davis with $1.5 billion in debt.
That means that if Ziff-Davis' stock debuts at $15.50, the company will only have a market capitalization roughly equal to its debt burden. Also, Ziff-Davis lost $71 million last year.
The latest hot Internet IPO?
Another Internet company slated to go public this week is First Virtual.
The company pushes the Web envelope by offering real-time video, data and voice solutions for the Internet, enabling the computer network to substitute for face-to-face meetings and conventional classroom-based education.
First Virtual has marketing relationships with IBM, Bay Networks and Northern Telecom, and has posted consistently increasing revenues since the spring of 1997.
Although First Virtual lost $4.3 million last year, 1997 sales rose 50 percent from 1996 levels, which themselves rose 300 percent from 1995 figures.
Analysts expect First Virtual to price at $12-$14 per share, raising $31 million.
Employee-training firm to go public
Employee-training company Provant likewise hopes to raise $31 million through an IPO expected to price at $11-$13 a share.
A classic "roll-up" firm, Provant was created through the merger of several firms aggregated with the intention of consolidating the competition by buying them up.
It's a strategy that works well in the highly fragmented employee-training industry, and the seven firms that went into Provant all bring unique strengths to the company.
Provant is currently in the process of acquiring four more companies, with 28 additional firms targeted for future acquisition.
Provant's ambitious consolidation plan should no doubt lead to explosive revenue growth. Of course, successful management and integration serve as keys to ensuring that all of that sales growth eventually translates into profits.
Dan Dykens of Renaissance Capital is confident that Provant will deliver earnings, because he sees Provant CEO Paul Verrochi as a "skilled acquirer."
Dykens pointed out that Verrochi successfully put together American Medical Response, a consolidator of ambulance companies, in the early 1990s.
The analyst said Verrochi brought American Medical public at $8.50 a share in 1993, then sold the company for $47 a share just four years later.
Additionally, Dykens noted that a trend of outsourcing employee-training programs is accelerating. Some analysts expect Provant to post a profit of 44 cents per share this year, and 62 cents per share in 1999.
Another big IPO for CLEC sector?
Another IPO to watch this week involves Hyperion Telecom, set to offer 10 million shares at between $14 to $16 each.
This deal could follow in the successful footsteps of US LEC (CLEC), which priced last week at $15 and closed up 61 percent from there on its first trading day.
Like US LEC, Hyperion is a competitive local-exchange carrier (or "CLEC") -- one of a growing number of phone companies that compete with entrenched regional phone-service providers.
Gabelli Funds plan IPO
Looking ahead, one deal that will certainly get attention in the coming weeks is an IPO from Gabelli Funds Inc., Mario Gabelli's money-management firm. Gabelli Funds filed with the Securities and Exchange Commission on Friday to go public.
Founded more than two decades ago, Gabelli Funds has about $13 billion under management -- including $7 billion in about 20 mutual funds -- and reported $36.7 million in profits last year.
-- by Bambi Francisco for CNNfn Interactive
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