Brokerages/Wall Street

Return to Article

Keefe's Latest IPO Dream

Lauren Silva

Hoping to mirror the success of boutique investment bank Evercore Partners(EVR Quote), Keefe, Bruyette & Woods has filed for an IPO.

The company hopes to raise $100 million in an initial public offering, according to a prospectus filed Friday morning. A number of executives at the investment firm will be selling shares, and the company will also receive some cash from the offering.

The Keefe Bruyette offering, which has been in the works for weeks, comes on the same day that Evercore's own IPO made a smashing debut in its first day of trading, breaking a streak of bad luck for new stock deals.

"We expect that our transition to a public company will enhance our ability to execute our growth strategy and meet our clients' needs," the prospectus says. "We believe that as a public company, we will have greater visibility with our clients, increased access to capital and additional currency to explore strategic opportunities as they arise."

Keefe Bruyette first said in May that it planned to pursue an IPO, joining a slew of other boutique banks, including Cowen(COWN Quote), the investment banking arm of France's Societe Generale and San Francisco-based Thomas Weisel Partners(TWPG Quote), that have issued public shares for the first time this year. Some investors questioned whether Keefe Bruyette would proceed with its IPO after another boutique bank, Ryan Beck, pulled its public offering last month.

The company had already cancelled an IPO once, in 1999, shortly before the company's then CEO, James McDermott, was charged with giving his girlfriend, a former porn star, insider trading tips.

The latest attempt at selling shares, however, represents a victory of sorts for Keefe, which lost 67 employees, nearly half of its New York office, in the Sept. 11 terror attack on the World Trade Center. The firm has rebuilt itself and regained its reputation as one of the premier investment banks for advising on financial-services mergers.

Still, some on Wall Street say it's more than a coincidence that Keefe waited until after Evercore priced its IPO on Thursday night to file its prospectus. There was great deal of speculation on Wall Street about how Evercore's IPO would fare given the poor performance of so many other IPOs the past two months. But the IPO for Evercore, co-founded by Roger Altman, a former U.S. deputy treasury secretary, surpassed expectations.

The company raised $83 million, pricing shares above the anticipated range of $18 to $20 at $21a share. In early trading, shares were up nearly 25% to $25.80.

"It's hard to believe that there wasn't some relationship" between the Evercore pricing and the Keefe Bruyette filing, says Frederick C. Lane, chairman and CEO of independent investment bank Lane Berry.

Evercore is regarded as the top-notch boutique bank, with high-profile investment banking clients. Unlike the two other boutique banks that went public this year, Evercore has a more streamlined business.

"There are two types of models now," Lane says. "The old business models like Cowen and Thomas Weisel, which are full service firms with underwriting and sales and trading, and the new model, which is independent advisers. Being a smaller player in the full-service model is a hard place to be."

Keefe Bruyette operates more as a full-service firm. The company has investment banking, sales and trading, and research divisions. But it is primarily focused on the financial-services sector, which gives the firm an expertise that differentiates it from the other small full-service banks.

But despite the performance of the Evercore offering, the IPO market remains deeply troubled. On Friday, nutritional-supplement chain GNC said that it was going to delay its IPO until a later date. The company sited market conditions for delaying its offering. This week, a number of other deals have run into trouble, including the IPO of memory-chip maker Qimonda(QI Quote) and technology company Alien Technology. Over the past month, nearly 20 companies hoping to tap the public market have either postponed or canceled plans for an IPO.