Banking & Capital Markets

IPO Market Coming Back, Sort of

Six IPOs scheduled to debut this week. Plus: the skinny on the Weight Watcher's deal.
Joseph McCafferty and Stephen TaubNovember 12, 2001

Is the initial public market really coming back to life?

It’s starting to seem that way. Following several successful IPOs over the past few weeks, seven companies are now expected to go public by the end of the day on Friday.

That could all change, of course, if the American Airlines plane crash in Queens on Monday morning touches off a mass selloff in the equity markets. If the major indexes drop mightily, expect many — if not all — of the week’s slated IPOs to get pulled.

But if the markets rebounds, and the deals do in fact make it to market as scheduled, it will be the first time since February that seven IPOs have been launched in one week. Not surprising, four of the possible deals are for health- care companies, the strongest sector among this year’s initial offerings. “This continues to be the strongest sector for IPOs,” says Francis Gaskins, the editor of IPO Corner, a Web site that follows the IPO market. “Health-care companies that are profitable or close to breakeven, should continue to be good IPO candidates.”

The biggest deal figures to be the IPO of Weight Watchers International Inc. Company management hopes to raise as much as $400 million in the deal, which is being led by Credit Suisse First Boston and Goldman, Sachs.

But this is not your typical IPO, since the company won’t get any of the dough. Rather, the shares are being sold by Artal Luxembourg SA, the private European investor that acquired Weight Watchers from H.J. Heinz Co. two years ago. The investment firm is simply trying to cash out its investment. Gaskins adds that companies with strong brands such as Weight Watchers have also faired well in the IPO market. “If all of these deals happen, and the Nasdaq composite doesn’t go down very much from here, I think you are going to see an increase in the number of companies filing to go public,” he says.

Other IPOs scheduled for this week:

  • Fisher & Paykel Industries Ltd., the New Zealand maker of home appliances and respiratory-care products.
  • Advisory Board Co., a provider of business services to health-care companies.
  • AMN Healthcare Services Inc., a nurse staffing company.
  • DJ Orthopedics Inc., which produces knee braces, soft goods, and specialty and other orthopedic products.
  • Bam Entertainment Inc., a computer game software publisher. This offering could be the hardest sell, since the company depends heavily on strong Christmas sales for most of its revenues.

Interestingly, the DJIA closed at 9608 on Friday. That’s right about where the index was before the September 11 attacks.

Piece of the Rock Moved

Not all the IPO news is good, however. Only 70 IPOs have come to market this year, an astounding drop from the 380 public offerings that were launched during the same period last year. And a few deals are being put on hold — or pulled altogether.

  • Prudential Financial Inc., the former Prudential Insurance Company of America, is now planning to price its IPO in the middle of December. Prudential management had hoped to take the company public in November, according to published reports.
  • On Friday, Jupiter Telecommunications Co. Ltd., Japan’s largest cable-television provider, canceled plans for an IPO in the United States due to “current market conditions.”

Jupiter, which is partly owned by AT&T Corp., Liberty Media Group, and Microsoft, had filed on November 8 to sell 377,600 shares directly, or in the form of American Depositary Shares. The offering range was supposed to be between $13 to $15. Not anymore.

  • Digirad Corp., a developer of a solid-state, digital gamma camera for use in nuclear medicine, withdrew a planned offering due to market conditions.