Not long ago, IPOs were destined to surge – defying any semblance of
reality. Of course, in the second half of 2000, the IPO market has mostly
been destined for failure. Nothing seems to work.
With Christmas fast-approaching, the IPO market has become nonexistent.
Rather, much of the action has been withdrawals. There was Diva Systems.
This company had to sing the blues, as it pulled its S1 filing. The
company, which is a provider of interactive TV technologies, was hoping to
raise $75 million.
Next, there was MoreDirect.com. The company is a B2B marketplace for, well,
computer stuff. Not necessarily exciting, huh? Kind of passe? In the
current brutal IPO market, the company definitely had no chance of survival.
Yet, MoreDirect.com did have a host of strong customers, such as IBM, Compaq
and Cisco.
Despite all this, there was an IPO that had the power to withstand the
extreme negativity: Resources Connection. The company
sold 6.5 million shares at $12 a piece. The lead underwriter was CS First
Boston. On its first day of trading, Resources Connection surged about 33%.
What makes Resources special? Perhaps it’s the fact the company has a
viable business model. In the past year, revenues were $126 million and
profits were $6.5 million.
Resources Connection is a professional services firm – a traditional one.
The focus is on accounting, HR, M&A, and taxation. Resources Connection has
more than 1,500 clients.
The company was a part of Deloitte & Touche. But in April 1999, there was a
management-led buyout.
Boring Is Hot
While high-tech IPOs melted down in 2000, there was strength in mega
insurance company IPOs. Examples include MetLife and John Hancock.
Jumping on the bandwagon is Prudential, which this week announced its
intentions to go public. In anticipation of this, Prudential has been
restructuring its business. For example, the investment banking division
will be scaled-down. There will be 160 investment bankers looking for jobs
this holiday season.
In all, Prudential has about 11 million policy holders and $363 billion in
assets under management.