BlackRock Balks at Quality of European IPOs

Posted on August 6, 2014 by admin

BrokerDealer.com blog post courtesy of extracts from FT.com

BlackRock, the world’s largest institutional investor, has sounded the alarm over the quality of European IPOs as hedge funds increase their bets against private equity-backed flotations, after the market for companies going public was soured by a string of high-profile failures. BlackRock said the flotation process needed to be improved, after the best six months for European IPOs since the financial crisis was ruined by poor market debuts from companies including Saga, the UK retirement group, Applus, the Spanish industrial testing business and eDreams Odigeo, the online travel agent.

Mr Leach told the Financial Times that the sheer volume of IPOs coming to market this year had affected communication between issuers and investors: “There has not been the same level of thoughtfulness and dialogue on valuation and structure.”

BlackRock tracked 104 IPOs in Europe in the first six months of this year, of which 38 deals – just over a third – are trading below their issue price. The Eurostoxx index is down around 0.5 per cent so far this year. Twenty companies which had been planning to go public – including names such as retail chain Fat Face – pulled their flotations. This year €33.7bn has already been raised in the European IPO market, more than in any full year since 2007, according to PwC.

Some of the worst performing IPOs in Europe have been those brought to market by private equity investors, with eDreams Odigeo, backed by Permira and Ardian, and Applus, the Carlyle-backed inspection group, both issuing profit warnings soon after listing. Many private equity groups use independent advisory firms such as STJ Advisors, which investment bankers say are too aggressive on pricing.

Investment bankers hit back at BlackRock’s criticisms of recent IPOs. A senior banker at one large bank said: “BlackRock wasn’t complaining after the first quarter when all the IPOs were up. Every potential investment should be looked at on its individual merits. The last time I checked, fund managers weren’t forced to invest.”

For the entire story from FT.com, please click on this link.

BrokerDealers Instant Message Battle v. Bloomberg Chapter 2: Perhaps Perzo

Posted on August 4, 2014 by admin

As an instant update to the July 31 BrokerDealer.com blog post profiling Blabber, the instant message (aka IM) application created by Goldman Sachs as a possible industry replacement for the ubiquitous Bloomberg LP chat service that connects Wall Street traders and salesman to their respective buyside customers, we thank Silicon Valley Business Journal contributor Jason McCormick for his coverage below.

Perzo Inc., an instant-messaging service based in Palo Alto, is in negotiations for a possible sale to a group led by Goldman Sachs Group Inc., according to the Wall Street Journal.

The group of financial firms, including JPMorgan Chase & Co. and Bank of America Corp., is seeking an alternative to Bloomberg LP’s messaging service, which has become a dominant way for Wall Street traders to communicate.

The Journal reported that the group is mulling an investment between $40 and $50 million in the company, created by communications executive David Gurle. The company already has financial backing from Merus Capital, which was founded by former Google Inc. executive Sean Dempsey.

The talks come following a push by Goldman to ban its traders from using some instant-messaging services offered by Bloomberg and others, according to The Wall Street Journal.

Bloomberg is facing pressure after reports surfaced that journalists in its employ used the service to check on the activities of its users.

http://www.bizjournals.com/sanjose/news/2014/08/04/perzo-an-instant-messaging-startup-may-tilt-at.html

BrokerDealer Fantex Completes IPO for NFL Star EJ Manuel

Posted on August 1, 2014 by admin

Buffalo Bills Star E.J.Manuel

Sports-centric brokerdealer Fantex announced it raised enough capital to close 523,700 shares of Buffalo Bills quarterback EJ Manuel and shares of his convertible tracking stock. The IPO required help from the company which stepped up to buy 250,000 shares, or 48 percent of its own shares of the total offered amount.

Trading under the Fantex ticker EJMLL, the stock began trading last week at Fantex.com. This is the second successful athlete IPO that Fantex has been able to close. CEO Buck French voiced his excitement on the success of the program and future plans to build E.J. Manuel’s NFL Brand.

Fantex, a sports marketing stock exchange, allows traders to capture a share of contracted athletes’ career earnings potential. On its exchange, Fantex offered 523,700 shares of stock at $10 per share on Manuel. In return, Fantex will pay Manuel almost $5 million up front to receive 10% of his future earnings tied to his “brand.” These future earnings include any NFL contracts, marketing endorsements, post-career broadcasting contracts, and any other checks he’ll cash through his NFL “brand.”

A full exploration of the firm’s operations, business model and potential risks to investors is the subject of a feature story in the print debut of The Alpha Pages

Top BrokerDealer’s Babble Takes on Bloomberg Chat

Posted on July 31, 2014 by admin

Goldman Sachs, the brokerdealer world’s most iconic investment bank is developing its own instant messaging service that could be used as an alternative to Instant Bloomberg, the chat tool contained in Bloomberg terminals. The project, nicknamed “Babble,” appears the brainchild of Goldman Sachs but won’t be exclusive to just one bank, according to CNBC. Rivals including J.P. Morgan are also said to be involved.

Banks have plenty of reason to run their own instant messaging services. First, there is the relationship with Bloomberg, which was forced to apologize after granting reporters access to client information stored in Bloomberg terminals. But CNBC says that the main reason for the move isn’t a lack of trust between the two firms or any particular security concerns. Rather, it’s a money and an integration issue. Bloomberg terminal leases cost upwards of $20,000. Plus, Babble is being designed so that it can be integrated with other tools that banks and clients can share, according to the report.

“It will be interesting to see how much a fully-functioning chat alternative would affect Bloomberg. As of last year, Bloomberg’s flagship terminal business accounted for 85% of the company’s revenue, though the firm is actively trying to diversify its business. Still, chat functionality isn’t the only use for the terminals, obviously. Wall Street has been trying to wean themselves off Bloomberg terminals for a while now. Would a chat replacement really be a deathblow? Unlikely. But who knows – maybe it will give banks a bit more leverage in negotiations.”

Fidelity Investments Partners With BrokerDealer Credit Suisse for IPO Deal Flow

Posted on July 30, 2014 by admin

Fidelity Investments and investment banker/brokerdealer Credit Suisse have formed a partnership that gives Fidelity’s retail brokerage clients access to participate in initial public offerings and follow-on equity offering underwritten by Credit Suisse. The partnership opens up IPO investing for customers of Fidelity’s registered investment advisor (RIA) network, its family office clients and its retail brokerage customers who qualify.

For Credit Suisse, the arrangement opens up its potential investor base to a wide arena of new customers. “It gives us the ability to distribute shares into the mass market that we didn’t have before,” David Hermer, Credit Suisse’s head of equity capital markets for the Americas, told New York Times DealBook.

About 232 companies have gone public so far this year, nearly 79 percent more compared with those in the period a year earlier, according to data from Renaissance Capital. By Mr. Hermer’s reckoning, the I.P.O. surge is still only in its early stages.

Credit Suisse completed 63 book-run IPOs in the first half of 2014, its most active half-year period on record. For that period, Credit Suisse ranks number two for IPOs in the U.S. and in the EMEA area–Europe, the Middle East and Africa. Looking ahead, Credit Suisse is working on several high-profile deals, including the much-anticipated IPO for Chinese internet company Alibaba.

And, the thinking goes, the more companies that Credit Suisse helps take public, the more that Fidelity customers benefit. The IPO participation is open to Fidelity investors with a minimum of $500,000 in retail assets.