Capital Markets

How Much Life in the IPO Market?

Two companies fly high; two others get off to a slow start.
Stephen TaubJune 30, 2005

The initial-public-offering market is starting to show some signs of life. On Wednesday, two companies that went public raised more money than they had originally sought. Then their stock prices surged on their opening day of trading.

Shoe retailer DSW Inc. had initially planned to offer 14.1 million shares at $15 to $17 apiece. Instead, it wound up pricing the issue at $19; shares closed at $24.10 on their first day of trading.

NeuStar Inc., a telecom services firm and a former unit of Lockheed Martin, raised a higher-than-expected $605 million, according to MarketWatch.com. The company had initially planned to offer 25 million shares at between $18 and $20 apiece, the website added; instead, it priced 27.5 million shares at $22 a pop. Shares closed at $26.

“We’re seeing a very positive tone. It’s a decent IPO climate and it’s gotten a lot better in the last few weeks,” Francis Gaskins, founder of research company IPODesktop.com, told Reuters. “With DSW and NeuStar, you have strong income statements and internal growth.”

However, the news was not all positive on Wednesday.

Deerfield Triarc, a REIT that invests in real-estate-related securities and other asset classes, had planned to offer shares in the $17-to-$19 range; instead, it priced 25 million shares at $16 apiece, according to MarketWatch.com. Shares ended their first day at $16, too.

Meanwhile, blood monitoring system company HemoSense Inc. priced its IPO at $5.50 a share, below its anticipated range of $6 to $8 per share, according to reports. Shares closed at $5.52.

There have been 83 IPOs this year, compared with 251 for all of 2004, according to The Wall Street Journal, which cited data from Thomson Financial.