Ben Holmes

Return to Article

Salute an Anthem of a Different Variety

Ben Holmes

Last week was a big week in equity syndicate.

I'm laughing at the way that sounds because it's been such a long time since I've been able to say that. It's true, though. I count 11 deals that got done, three of them IPOs. It's one thing to print a lot of business. It's altogether another for the buyers of that business to make money by participating. Last week was definitely a money maker. Let's recap the deals.

The week started with a huge (100 million shares) IPO from blue-chip insurer Principal Financial Group(PFG). I liked this deal very much but was blown away by the $2.50 premium (that's 13.5%) it garnered in its first session. Think about it, that's a quarter of a billion dollars in market cap created in the open market in one day. To me that spells pure demand. Principal set the tone for the rest of the week, and I scrambled to raise my opinions on the remaining deals. Looking back, I'm glad I did.

Shares of Cross Country(CCRN) and Penn Virginia Resource Partners(PVR) both turned in solid numbers on the day of their IPOs. Cross Country was up more than 19%, and Penn Virginia Resource rewarded buyers of its deal with a cool 8% pop over issue. I know, these aren't as sexy as the scorchingly hot IPOs of the dot-com era, but hey, we live in a different world now, right? From where I'm sitting, a 10% or 15% return on a flipped deal is just fine.

This week there are four IPOs scheduled to price, but the truth is that there are really only three. I say this because in my heart I don't believe that Universal Hospital Services (proposed symbol UHOS:Nasdaq) will get done. I may be wrong about this, but it doesn't look that way.

The deal I'm most looking forward to is the demutualization of Anthem (proposed symbol ATH:NYSE). Anthem is a big Blue Cross operator based in Indiana. The company is offering 40 million shares at a price range of $33 to $37. The balance sheet is a killer, and my sense is that there is every bit as much demand for this one as there was for PFG last week. Look for a solid multipoint premium right out of the box.

Two other names on the calendar this week are LogicVision (proposed symbol LGVN:Nasdaq) and Odyssey HealthCare (proposed symbol ODSY:Nasdaq). Both deals appear to be in good shape, and I expect a decent performance from the pair.

Remember, the end of the year is on us, and for the most part, the investment banking firms have had a lousy 2001. I'm betting that the calendar stays strong through December as these firms hustle to post a strong fourth quarter.

To get details on these deals as they price, tune into Columnist Conversation early in the morning. Have a great week.