But with volatility whiplashing markets since equities peaked last fall, many companies are sitting on the sidelines, awaiting calmer markets.
Year to date through April 28, the number of companies that had announced intentions to float an IPO was down 18 percent from the same period a year ago. The number that had actually priced their offerings was off 65 percent.
“It’s been so volatile, and companies need a bit of calm and serenity,” said Jon Braatz of Kansas City Capital Associates. “And essentially for the past five weeks there have been no IPOs, with the exception of a very few isolated ones. When you look at the broad spectrum, unless you had a very, very specialized business that happened to be in favor, and even then it might be difficult, it’s been tough, and we’re not sure when it’s going to re-emerge.”
There have been some notable exceptions. An IPO by Visa in March was the largest ever, raising $17.9 billion.
In the Kansas City area, where IPOs are not common anyway, it has been very quiet. In 2007 there were only a couple of IPOs. In 2006 there were a half dozen.
One locally based company that successfully went to market last year was FCStone Group Inc. The company, which has offices scattered around the globe, helps clients manage commodity risks ranging from grains to energy to currencies.
Bill Dunaway, chief financial officer for the company that moved to the Northland last year from Des Moines, Iowa, said FCStone realized about $131 million in its March 2007 IPO after underwriting and other fees.
“We made the decision in 2006 to pursue the IPO and did so for several reasons,” Dunaway said.
The IPO allowed some of the company’s cooperative owner-members a means to realize some of their gains, and it raised cash for FCStone to pay down debt and make acquisitions.
“We saw the potential to do acquisitions with the consolidation we saw taking place in our industry,” Dunaway said.
FCStone went public March 16, 2007, at $24 a share with more than 5.8 million shares, substantially more than the 4.6 million initially announced. Shares closed above $31 a share by day’s end.
For the quarter that ended Feb. 29, the company had earnings of $12.1 million, or 42 cents a share, compared with $6.9 million, or 32 cents a share, in the previous year.
The company said its revenues were driven by higher exchange-traded and over-the-counter volumes primarily related to volatility in a wide range of commodities, including grains, energy and metals.
“They happened to come public at the right time in providing a service to help companies hedge their commodities costs. And let’s face it, commodities have been soaring,” Braatz said.
“They’ve been very successful.”
| Company | Ticker symbol | Stock price Dec. 31, 2007 | Shares outstand. in millions | Market value in millions |
| Embarq Corp. | EQ | $49.53 | 153.1 | $7,583.04 |
| Spirit Aerosystems Holdings Inc. | SPR | $34.50 | 139.5 | $4,813.42 |
| FCStone Group Inc. | FCSX | $46.03 | 27.7 | $1,275.69 |
| Orion Ethanol Inc. | OEHLE | $5.55 | 32.7 | $181.27 |
| Digital Ally Inc. | DGLY | $7.30 | 14.1 | $102.87 |
| Enerjex Resources Inc. | EJXR | $1.00 | 22.2 | $22.20 |
| Ethanex Energy Inc. | EHTEE | $0.14 | 65.1 | $9.11 |
| Alternative Energy Sources Inc. | AENS | $0.14 | 40.5 | $5.63 |
| Freedom Financial Group Inc. | FFGR | $0.15 | 19.9 | $2.99 |
Join the discussion
Share your observations and experiences about news. Lively, open debate is the goal, but please refrain from personal attacks or comments that are racist, vulgar or otherwise inappropriate. If you see an inappropriate comment, please click the "Report as violation" link to notify a KansasCity.com editor. Thanks for your feedback.