NYMEX Holdings up 125% in IPO

November 18, 2006|By MarketWatch

NEW YORK -- NYMEX Holdings Inc.'s initial public offering vaulted 125 percent into the record books yesterday as the top-performing U.S. IPO since 2000.

The commodities bourse ended its 134-year run as a private, member-owned exchange with a big splash on Wall Street as the latest financial marketplace to tap into greater profit margins from electronic trading.

Its added appeal comes from its leading role in hot energy and metals businesses and its status as a player in the global consolidation of financial marketplaces.

Chairman Richard Schaeffer said his company's IPO "wildly exceeded our expectations."

Overall market conditions have been helpful as well to IPOs, which have picked up the pace as the Dow Jones industrial average set another record yesterday.

NYMEX surpassed the top two U.S.-based IPOs for the past six years: Chipotle Mexican Grill gained 100 percent in January, and Transmeta rose 115 percent in its debut in late 2000.

Baidu.com, a China-based Internet firm, vaulted more than 354 percent in its U.S. debut in 2005.

The NYMEX opened at $120 a share, more than double its $59 price, and never looked back.

The stock gained strength in the open market, rising to $152 a share on heavy volume of 19.2 million shares.

The IPO cooled off a bit by the end of the session and closed at $132.99.

With 6.5 million shares in the IPO, the NYMEX raised more than $380 million, but the deal could have been even more lucrative if the underwriters picked a loftier price.

The pricing came in above the expected range of $54 to $57 a share.

NYMEX, the corporate name for the New York Mercantile Exchange, had already boosted its IPO price range from $48 to $52 a share earlier this week and increased the size of the offering from 6 million shares.

"All the stars have aligned for NYMEX and expect its IPO to be a hot commodity," Renaissance Capital said in its IPO of the week column.

Now at about $135 a share, the NYMEX is trading at 74 times its annualized earnings, according to IPO analyst Francis Gaskins.

That's richer than the valuation of the Chicago Mercantile Exchange, which now trades at about 47 times its annual earnings.

The NYMEX's recent trading price of about $135 a share gives it a market cap of about $12 billion as one of the richest exchanges in the world, behind the $18.5 billion market cap for the Chicago Mercantile Exchange, the $16.3 billion market cap for the Deutsche Boerse, the $14.9 billion for the New York Stock Exchange and the $12.3 billion market cap for the Euronext.

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