Big stock offerings next week could lift markets
Orders already exceed GM’s 425 million-share IPO
WASHINGTON – In the world of new stock offerings, everything about next week is big: the number of deals, the amount of money expected to be raised and the profiles of the companies going public.
The action is likely to draw a wide range of investors into the U.S. stock market. If investors snap up stock of companies such as General Motors Co. and casino operator Caesars Entertainment Corp., that could win over skittish traders who have taken refuge in the relative safety of bonds.
Stock in the week’s biggest deal, General Motors, already may be scarce. Investment bankers handling the GM sale have more orders than stock for both the 365 million common shares and 60 million preferred shares that will be sold next week, a person briefed on the sale said Friday.
The market for initial public stock offerings has been heating up and providing good returns. The FTSE Renaissance Composite IPO index, which tracks the performance of stocks that had IPOs in the past two years, is up nearly 13 percent this year. By comparison, the broad Standard & Poor’s 500 index has gained 9 percent in that period. Large institutional investors have snapped up most of the shares from new stock offerings.
The General Motors IPO could change that, said Kathleen Smith, an IPO expert and founder of investment adviser Renaissance Capital LLC. Most recent IPO investments have come from funds that specialize in initial public offerings of stocks, she said. After next week, Smith said, managers of smaller portfolios and nonspecialists are likely to take an interest.
“This is going to be a consciousness-raising IPO for a broader group of investors who have not been particularly interested in the IPO market,” Smith said.
Besides General Motors and Caesars, next week’s big IPOs include management consultant Booz Allen Hamilton Inc., the massive broker-dealer LPL Investment Holdings Inc. and electronics maker Aeroflex Holding Corp.
With 10 deals expected to come to market next week, it will be the most active period for IPOs since 2007, according to Renaissance data.