CurrentOfferings.com Story:

IPOs in �04

San Diego Daily Transcript, Jan. 2, 2004

By George Chamberlin

The thrill of the deal returned to Wall Street in 2003 and several San Diego-based companies were among the biggest winners of the year. Eighty-four new initial public offerings of stock were issued last year, a far cry from the 486 IPOs that hit the street at the peak of the market in 1999.

"The IPO market built up a head of steam in 2003 that should carry over to 2004," said Linda Killian, founder of Renaissance Capital, an institutional research firm that specializes in public offerings.

"Investors are heading into the year with interest rates at 30-year lows, reduced war worries, regulatory reforms in place, and the biggest tax cut on capital formation since the Reagan years," said Killian. "With this positive economic backdrop and with the individual investor still hesitant to jump in, we believe the stage is set for a receptive IPO market in 2004."

The best performing IPO in 2003 was Accredited Home Lenders (LEND), a residential mortgage loan company headquartered in San Diego. The company issued 9.65 million shares of common stock in February priced at $8 a share. The stock peaked at $33.74 in mid-November and closed the year slightly above $33 a share, an increase of nearly 300 percent from its offering.

Another local stock that has moved sharply higher since it's offering is Kintera Inc. (KNTA). The company provides Internet services and software products that enhance the fund-raising efforts of non-profit organizations. Kintera, the last IPO of 2003, priced 5 million shares of stock at $7 a share on December 19. In less than two weeks the share price had climbed to $12.50.

Savvy investors may have been aware that Kintera is the latest venture of San Diego entrepreneur Harry Gruber. In 1997 he launched an offering for InterVu, which provides Internet audio and video streaming services. The IPO was priced at $10 a share and quickly spiked to $135. In 2000, InterVu was purchased by Akamai Technologies Inc. (AKAM) in a deal that was valued at $2.8 billion.

Of course, the investing environment has changed significantly since the technology bubble that burst three years ago. But, there's nothing like an overall rebound in the stock market to bring back the desire to invest in new companies.

"The year 2003 will go down in history as one of the slowest periods for initial public offerings," said Jeffrey Hirschkorn, senior analyst for Current Offerings. "For 2004, analysts predict a solid year, considering the rather large flow of quality deals in registration with the Securities and Exchange Commission."

The year 2004 could be active for local biotech companies that explore the IPO market for financing.

"Even though the IPO market will be choppy in the first half of 2004, we expect to see about 25 to 30 IPOs getting done in 2004," said G. Steven Burrill, a San Francisco investment banker who specializes in biotech companies. "Early in the year, the supply of deals will likely overwhelm market appetite. But as the year progresses, the supply/demand situation should equalize and the markets will improve."

However, every biotech deal to surface this year will pale by comparison to the much-anticipated IPO for Google, the popular Internet search engine operator. The company is reportedly in talks with a number of underwriters to finance the deal that could raise as much as $3.8 billion. Whichever company is selected to bring the IPO to market could get as much as $150 million in fees.

Although Google has yet to even indicate they will explore an IPO, the buzz on the street is that the offering could be in place by the middle of the year.

One big deal that is already on schedule for 2004 is the offering of the life and mortgage insurance operations of General Electric (GE). The company announced it would file a registration statement with the SEC this month and complete the IPO in the first half of the year. The IPO of the new company, Genworth, could raise as much as $3 billion.

"This IPO is both an important step in the transformation of GE and a significant opportunity for Genworth," said Jeff Immelt, CEO of GE. "As a separate public company, Genworth will be able to pursue its own strategy with direct access to the capital markets to fund its own business initiatives."

How many companies follow Genworth, and possibly Google, to the IPO trough will likely be determined by the economy and the financial markets. Another year of 30 percent gains for the S&P; 500 stock index and 50 percent gains for the Nasdaq will likely have companies lining up to offer stock to investors.