$3B Pru IPO leads slew of offerings
11 IPOs on tap this week led by Prudential Financial and ARAMARK
NEW YORK (CNN/Money) - New issues plan to go out with a bang led by the $3 billion initial public offering from Prudential Financial Inc. in what promises to be the strongest week this year.|
Once the Wall Street darlings, IPOs nearly disappeared in 2001 as investors dumped technology stocks and volatility rocked the broad market. But in recent months, as the Nasdaq Composite has strengthened, IPOs have rallied with it.
"For a change, you've got the wind at the back of the IPO market," said John Fitzgibbon, editor of IPO Desktop.
The IPO market will close up shop after it floats 11 new issues this week, the strongest time period since September 2000 when 20 deals raised $3.9 billion. Including the IPO from Aluminum Corp. of China (Chalco), which priced last Thursday but will trade on Monday, 11 IPOs will attempt to raise about $6 billion, according to data from Dealogic, a New York-based investment banking research firm.
But the year's totals for new issues reveal the significant downturn experienced by IPOs. So far in 2001 only 83 IPOs have raised $39 billion, the slowest year since 1990, Dealogic said.
The week will mark the return of Goldman Sachs, which will have three of the strongest deals on the calendar. Goldman will serve as lead book runner on offerings from ARAMARK Worldwide Corp., NetScreen Technologies Inc. and Prudential and share the top honors with Lehman Brothers on United Defense Industries Inc.
Piece of the rock
At $3 billion, the Prudential Financial IPO will rank as the third largest new issue this year, behind the $8.6 billion offering from Kraft Foods (KFT: down $0.05 to $31.95, Research, Estimates) and the $4.1 billion deal from Agere Systems (AGR.A: up $0.04 to $6.04, Research, Estimates).
Prudential, the largest U.S. individual life insurer with 15 million customers, has scaled down its deal from the $3.9 billion maximum it initially filed to raise in April. But hopes are high for the IPO since insurance-related offerings typically perform well, analysts said.
Anthem Inc. (ATHM: Research, Estimates), one of the nation's largest benefits firms, surged nearly 14 percent in late October after increasing the price range for its deal.
Principal Financial Group Inc., a provider of retirement and savings products, rose nearly 14 percent in Oct.
"Investors will be looking to see if Prudential can match Principal and Anthem," said analyst Kyle Huske of IPO.com.
Because its large size, Prudential will not produce a "large pop" on its open but will likely trade in a narrow range close to its offer price, IPO Desktop's Fitzgibbon said. Prudential's $3 billion offering will account for half of the deal volume this week.
Newark, N.J.-based Prudential Financial will trade as a blue chip and is best as a long term play, he added.
The 126-year old insurer is immensely profitable, with $352 million income on $20.4 billion revenue for the nine months ended Sept. 30. compared to $666 million income on $19.9 billion revenue for the same time period last year.
Prudential plans to sell 110 million shares at $25 to $30 a share via Goldman Sachs and Prudential Securities. Of the total shares, 93.5 million will be sold in the United States with 16.5 million sold internationally.
Prudential plans to price Wednesday and trade Thursday under the New York Stock Exchange symbol "PRU."
Reinsurance firm Converium Holdings Ltd., also plans to float its IPO this week. Zurich, Switzerland-based Converium offers life and non-life reinsurance throughout the world.
Converium expects to price 70 million American Depositary shares at $21.75 to $27.19 each via UBS Warburg and Merrill Lynch. The reinsurer will trade under "CHR."
A return to profits
Aramark Worldwide Corp. could also surge in its debut, analysts said. The company provides outsourced services such as food concessions, uniforms and facility maintenance to clients like the Atlanta Braves, Boston University and the State of Kansas Department of Corrections.
Forbes ranked ARAMARK the 16th largest private company this year, and placed 17th the prior two years. "Aramark is a bit of nameless, faceless company that has come in contact with lots of people who don't know it," IPO.com's Huske said.
Like Prudential, ARAMARK is also very profitable. The company reported $176.5 million in income on $7.8 billion in sales in 2001 compared to $168 million in income on $7.3 billion sales in 2000.
ARAMARK plans to sell 30 million shares at $20 to $23 each via Goldman and J.P. Morgan. The IPO is expected to price Monday and trade Tuesday under the NYSE symbol "RMK."
Tech comes back
Technology issues have scored somewhat of a rebound of late. Lawson Software Inc. (LWSN: up $1.30 to $18.00, Research, Estimates), a provider of enterprise software, surged Friday following the strong debut of Magma Design Automation Inc. (LAVA: up $0.77 to $20.70, Research, Estimates), a provider of chip technology software, which surged nearly 50 percent.
Now a few will look to continue this success. Of the techs, the week's best pick goes to Nassda Corp., which makes chip design software. Like ARAMARK and Prudential, Nassda is in the black with $22 million revenue on $2 million income this year versus $6.8 million revenue on $1 million income in 2000.
"How often do you find a technology company growing at this rate," IPO Desktop's Fitzgibbon said.
Santa Clara, Calif.-based Nassda plans to sell 5 million shares at $8 to $10 each via Robertson Stephens. The company plans to trade under the Nasdaq symbol "NSDA."
NetScreen Technologies Inc., which offers security hardware and software, could also receive a boost. Sunnyvale, Calif.-based NetScreen makes a firewall that helps prevent unauthorized network access.
Unlike most companies tapping the equities markets now, NetScreen is not profitable with $31.3 million in losses on $85.6 million revenue. In fact, the company states in its most recent filing with the Securities and Exchange Commission: "We anticipate continued losses and may not achieve profitability," NetScreen said.
NetScreen plans to sell 8 million shares at $9 to $11 via Goldman and trade under the Nasdaq symbol "NSCN."
United Defense Industries Inc. is the one trendy IPO on calendar. The Arlington, Va.-based company makes and designs combat vehicles, naval guns and missile launchers. "This is the first defense-related IPO of this nature to come to market in five years," Fitzgibbon said.
United Defense is also a prime contractor on several U.S. military programs. The company plans to sell 21.1 million shares at $18 to $20 each via Lehman and Goldman and trade under the NYSE symbol "UDI."