The much-awaited initial public offering of Accenture Ltd., the consulting spinoff of the former Arthur Andersen consulting business, is ready to roll this week.
The implication for other would-be issuers: While the latest reports indicate that the deal is likely to come off on time and with relatively few hitches, the subsequent performance of the stock itself will have a major effect on other issuers’ ability to tap the IPO market, especially given the deal’s bellwether status.
Market sources indicate that the offering–the consulting firm hopes to raise more than $1.7 billion–has been attracting more than sufficient investor interest to price as scheduled on Thursday, July 19.
But the larger question being asked by market observers is whether or not the issue has the capacity to perform well once it moves to secondary trading on Friday.
On this point there exists considerable skepticism.
To their credit, Accenture, Goldman Sachs, Morgan Stanley, and the rest of the syndicate running the deal have helped reassure the initial investors by avoiding the temptation (so far) to change the deal terms in response to demand. The firm’s 115 million shares are slated to be sold at a range of $13 to $15, the same deal dimensions as announced early last month.
But investors are nevertheless mindful of the weakness of the economy, and its effect in particular on the consulting business itself. The highly publicized layoff and partner remuneration cutback announcements that have occurred since the firm’s 2,500 partners voted to go public may have perversely added to this effect instead of reassuring an investing public concerned about the Accenture bottom line. See related story.
And let’s not forget KPMG Consulting. The firm’s February IPO was the first major such offering to hit the market this year. Its shares priced at $18, the top end of the estimated price range, then soared more than 30 percent to close their first day of trading at $23.48. However, they closed at just $14.45 on Friday. Enough said.
The bond markets will see a smattering of activity in the weeks ahead:
In investment grade, there are only a few issues announced, with none definitely set for this week. These include:
The junk bond market will see up to $2 billion of offerings in the near future: