The New York Mercantile Exchange, the historic home of oil trading on Wall Street, is going public today, in what has been billed as the hottest flotation of the year, and more evidence that the market for initial public offerings is booming.
The Nymex one of the last major exchanges to demutualise raised $383.5m (£203.1m) with an IPO priced above its forecast range. The 6.5 million share offering a 7.5 per cent stake in the company sold for $59 a share, compared with the forecast range of $54 to $57. Investors believe that a publicly quoted Nymex could soon be drawn into the wave of consolidation sweeping the world's stock markets. The New York Stock Exchange is one of several businesses touted as a potential buyer.
The exchange was created by dairy merchants in 1872 as a place to trade butter and cheese, and it changed its name to the New York Mercantile Exchange a decade later. Today, its open-outcry trading floor accounts for two-thirds of global trading in energy futures and options.
Demand for the flotation has been fuelled by the soaring volumes of trading in futures and options, which is growing at about 30 per cent a year. The Nymex's rival, the Chicago Mercantile Exchange, has seen its shares rise 14-fold since its flotation in 2002.
"Who would have thought a stock exchange would be the hottest company going public this year," said Art Hogan, the chief market analyst for Jefferies & Co. "People are trying to get to a window of opportunity as these exchanges consolidate to get more market share. Everybody hopes they are buying the next Chicago Merc."
The flotation of the Nymex comes on the heels of two giant public offerings yesterday, and takes the total money raised by companies this week to more than $3bn. Wall Street flotations this year look set to overtake the $40.4bn raised in 2005.
The flotation of Hertz, the car rental company, raised $1.3bn for the private equity consortium that bought the business from Ford less than a year ago. The shares were sold at $15, below the $16-$18 range, because of criticism that its owners led by Carlyle Group and Merrill Lynch have taken too much money from the business in dividends and left it burdened with too much debt.
By contrast, shares in KBR, the military contractor being spun out of Halliburton, were in strong demand, despite the uncertainty over its management of Devonport dockyard in the UK. KBR sold $473m of shares, priced at the top of the range, and they jumped 24 per cent in early trading.
The Ministry of Defence expressed doubts over the financial strength of KBR as a standalone company and warned it could strip the company of its contract at Devonport, which accounted for almost half KBR's operating income this year.Reuse content