July's IPO Market Looks Slow; Typical Summer Month

A slow IPO market is nothing unusual for the summer months. Investment bankers are reluctant to kick off road shows for transactions while most of the investing public is on vacation. Therefore, action in the world of equity syndication has always been limited to a few issues per month. Currently, the IPO Monitor forward calendar reveals that eight firms have tentatively scheduled offerings for July. Of that group, half of the calendar entries remain under the to-be-announced section of the calendar.

"After weeks of waiting for a rally investors had to endure one more delay," said Renaissance Capital Management, managers of The IPO + Fund, in its weekly recount of the new issues market. "The question that awaits the new issues market for the third quarter is whether investors will remain patient or choose to fly standby in other asset classes."

Adds John E. Fitzgibbon Jr., co-author of The IPO Hardball, a new weekly e-newsletter available at www.ipodesktop.com: "Given the background of today's stock market, it isn't too surprising that the IPO calendar is a shadow of its former self. But take heart. You can always look forward to a summer rally."

July 2001: A Whole New Game

One year later the IPO market represents a totally different picture, considering that issuers and underwriters have been extremely careful on launching highly risky IPOs. Last year, during July investment bankers paraded 48 entities to market. But, now the landscape is totally different. Not to mention, that investors are now looking for transactions that bring profitability and a scaleable business model to the Street at offering.

"Traditionally, IPOs go on vacation whenever earnings season kicks into full gear," noted George Nichols, dean of IPO research at Chicago-based fund tracker Morningstar.com. "Nowadays, the earnings warning season is grabbing plenty of headlines. Underwriters are careful not to bring out new issues when investors are focusing on other areas."

For most of the year, investors have stood by investments from the energy sector. That theory began to evaporate towards the end of the second quarter. After the abysmal debut of General Maritime (ticker: GMR), American Eagle Tankers (ticker: AEH), a 6.75 million-share underwriting was forced to withdraw due to market conditions. The real truth: General Maritime's devastating performance forced Salomon Smith Barney and AEH's parent to avoid public humiliation.

Accenture is Deal to Watch

Therefore, for July, analysts are confident in predicting that there's only one deal to watch. That is: Accenture (ticker: ACN), the former consultant arm of Arthur Andersen. The offering is slated to price 115 million Class A shares at talk of $13-$15, of which proceeds have been earmarked for debt repayment and working capital. After completion of the IPO, the firm's partners will control 82% of the voting power

Accenture is scheduled to debut during the week of July 16. Underwriters for the IPO include joint book runners Goldman Sachs and Morgan Stanley. Co-managers on the $1.6 billion transaction include Credit Suisse First Boston, Deutsche Banc Alex. Brown, JPMorgan, Salomon Smith Barney, Banc of America Securities, Lehman Brothers, UBS Warburg and ABN AMRO Rothschild, a last minute addition to the team.

Based in Hamilton, Bermuda and with offices in Palo Alto, Calif., Accenture is the world's leading provider of management and technology consulting services and solutions. Accenture has more than 75,000 employees based in more than 110 offices in 46 countries delivering to clients a wide range of consulting, technology and outsourcing services. The company operates globally with one common brand and business model. Accenture serves 84 of the Fortune Global 100 and more than half of the Fortune Global 500. In total, they've served over 4,000 clients on nearly 18,000 engagements over the past five fiscal years.

With comments, media interviews or questions, feel free to contact me via e-mail at jeffh@ipomonitor.com.


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