Capital Markets

Hambrecht IPO: Hurry Up and Wait?

A Dutch auction pioneer is contemplating using his brainchild. The question is: When?
Ed ZwirnAugust 31, 2004

William Hambrecht, the 69-year-old founder and chairman of WR Hambrecht & Co., the San Francisco investment bank, said he eventually wants to use the Internet-based, Dutch auction method he helped inaugurate to take his firm public, according to Bloomberg. But another report suggested that wasn’t likely to be any time soon.

Hambrecht has been widely credited with helping to persuade Google to use the auction method for its $1.92.billion initial stock sale. The Google offering saw a major retreat in the company’s per-share price to $85, much lower than the $108 to $135 range forecast by the company.

That prompted the search engine to cut back the size of the offering and beat a partial retreat from the Dutch auction plan used for the initial public offering pricing process. Instead of opening up the entire process to smaller investors, the company granted the IPO’s underwriters the right to buy about 2.9 million additional shares at the initial public offering price to cover over-allotments.

Advocates of the new way of handling an IPO were quick to point out that the shares were priced in a difficult market and that the result in no way invalidated the process.

Another Internet Dutch auction IPO coming soon after the Google offering could presumably help settle the debate. Hambrecht, according to a report by Bloomberg last week, intimated that he was in a hurry. “My philosophy is: Do it as soon as you can because it’s better money than private money,” he was quoted as saying.

But a Friday report in the San Francisco Chronicle quoted Hambrecht spokeswoman Sharon Smith as saying “has no immediate plans to go public. While it is our long-term goal, it could be years.”

Hambrecht started the firm in 1998 after three decades at Hambrecht & Quist Group, a brokerage he co-founded in 1968, according to the newspaper. That firm went public in 1996 through a $56.million share sale and was sold three years later to JPMorgan Chase & Co. for $1.2 billion.