Pru's New Net Team Rolls With bamboo.com Offering

A new banking team chalks up its first success as bamboo.com's stock price soars.
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Prudential Securities

finally found out what all that Internet hype -- or what's left of it -- is all about.

On Wednesday night, the firm priced 4 million shares of

bamboo.com

(BAMB)

, a Palo Alto, Calif. provider of online tours of real estate properties, at 7 per share, raising $28 million. And the stock soared Thursday, more than doubling to close at 17 9/16, up 10 9/16. The stock, with more than 24 million shares traded, was the third most active on the

Nasdaq

on Thursday.

Amazingly, on Friday -- with most of the Internet sector retreating -- bamboo.com was still soaring, climbing another 33% to 23 3/8, up 5 13/16, on volume of almost 12 million shares.

The deal was a success and it gave Prudential's fledgling Internet investment banking group a big boost. But the deal wasn't exactly a

priceline.com

(PCLN)

.

In the past few weeks, bamboo.com not only delayed the deal, but also cut back the size of the offering, decreasing both the price range from an initial range of between 10 and 12, and lowering the number of shares sold by 1 million shares.

"These deals

bamboo.com and the other IPO priced Wednesday,

ImageX.com

(IMGX)

had been cut in price and were viewed as damaged goods," says David Menlow, president of

IPO Financial Network

in Millburn, N.J. "If these deals get done at a low enough price, you'll get some investor interest."

That's hardly the type of cache to catapult Pru into the league of elite West Coast investment banks. If it doesn't get there, it won't be for lack of effort. The firm in June created the group with six bankers, chief among them Charles Millard, who was hired in May to head the New York end of the effort. Millard was previously head of the

New York City Economic Development Corp.

The firm was trying to focus its efforts on the sector to perk up its standing in the industry's underwriting tables, where in overall equity underwriting it dropped to 19th so far this year from 11th last year, according to

Thomson Securities Data

. Last year, Prudential Securities finished sixth in IPO underwriting; this year it is ranked 18th and has only four deals done, including bamboo.com.

Although bamboo was the first IPO the new Net group worked on from start to finish, on Aug. 2 Prudential did bring out

BigStar Entertainment

(BGST)

, which describes itself as an "online filmed entertainment superstore."

But BigStar, a deal that was inhouse prior to the Net group forming, has stumbled almost 20% since its IPO, which was priced at 10 per share. The stock closed at 8 1/8, up 13/32, on Friday. Another deal,

GreenMountain.com

, which was to be Pru's Net group's first Internet IPO, has been postponed indefinitely.

But the off-week gave Prudential the empty stage it evidently needed to cultivate interest in bamboo.com. "This week, we saw the window of opportunity the market was presenting, so we're pleased with how the deal went," Millard says. He declined to comment further, citing the quiet period on the bamboo.com IPO.

Millard represented Manhattan's Upper East Side from 1992-95 on the

New York City Council

; prior to that he was aide to former New Jersey senator,

Millicent Fenwick

.

Despite Millard's New York connections, the firm does not have a Silicon Alley IPO in its pipeline. It has three other Net IPOs in the pipeline, all of which are supposed to be priced sometime next month; they include:

PCQuote.com

,

Loislaw.com

and

PurchasePro.com

.

In addition to hiring Millard, Prudential shuffled several other bankers. Jonathan Morgan, head of the firm's technology banking unit, and Allen Morton, Pru's co-head of mergers and acquisitions, were put in charge of the Internet group's West Coast effort in Palo Alto. They all report to Paul Scura, head of investment banking.

However, repackaging a 1978 Pinto into a

Formula 1

racer may be a little easier than what Prudential is trying to do at this point. Yet, with Net deals being the only game in town for new offerings through much of this year, an investment bank may have little choice.

Indeed, in April, once-stellar

Friedman Billings Ramsey

(FBR)

created

fbr.com

, and said it was going to

target Internet IPOs. Although it recently inked an agreement with

Fidelity

to offer the mutual fund giant's customers a way into new offerings, fbr.com hasn't led a deal to market yet.

Prudential, too, might be thinking it may not be too late to come to the party, even if the festivities have shown signs of winding down. "The first rush of investment banks to the Net market was about four years ago," Menlow says. "But now, you have to have a presence on the Internet."

Last week, the firm announced it would offer clients online access to IPO information through its revamped Web site. (The firm also features

PruTrade

, a service for clients to trade online.)

Can Pru.com be far behind?