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In Times of Market Uncertainty

Jeffrey R. Hirschkorn, Senior IPO Analyst, Aug. 9, 2004

In times of market uncertainty, especially in an economy where less newly created jobs than expected were created in July, investment bankers are starting to weed out the rather unusual calendar of initial public offerings. One can�t forget that the summer months are typically the slowest. Not in 2004. Prior to the market�s recent malaise, all was well in the world of equity capital markets. And, as such we had a ramp up in new deal filings. By this stage, most of those transactions are near ready to launch.

However, in a market where uncertainty is beginning to rule, investment bankers are turning to industries that are economic proof. Such sectors that have been traditional winners in slow economies are issues from the banking sector. Why? No matter what the conditions have been in previous cycles, stock issuance from banks has done well.

With that in mind, underwriters have a pair of banking deals scheduled to debut in the coming week. Those deals include Puerto Rico-based EuroBancshares (proposed: EUBK), a diversified financial-services holding company and Placer Sierra Bancshares (proposed: PLSB), a California-based banking institution. For the Euro IPO, Keefe Bruyette & Woods is the lead underwriter while Friedman Billings Ramsey and RBC Capital Markets are the chieftains for the Placer Sierra offering.

Another sector that should do quite well in this market is the virtual trading exchange market because of its ties to financial-services. Case in point: Archipelago Holdings (proposed: AX), the first open all-electronic stock exchange in the United States. The firm is set to offer 11 million shares alongside selling holders at talk of $13.25-$15.25 through joint lead managers Goldman Sachs and JP Morgan Securities. Owing to an apparent conflict between most of the underwriting group [due to ownership in the ECN], Piper Jaffray, a co-manager on the IPO, has been named qualified independent underwriter.

For complete analysis on the upcoming week, Current Offerings will publish an extensive market piece on later today that details the current environment for new issues.

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