WASHINGTON — In the world of new stock offerings, everything about next week is big: The number of deals, the amount of money expected to be raised, and the profiles of the companies going public.
The action is likely to draw a wide range of investors into the US stock market. If investors snap up stock of companies such as General Motors Co. and casino operator Caesars Entertainment Corp., that could win over skittish traders who have taken refuge in the relative safety of bonds.
Two planned IPOs from Massachusetts companies were postponed recently. In September, Liberty Mutual Group delayed what would have been the largest IPO in the stock market this year, a $1.2 billion offering from its largest insurance unit, and First Wind Holdings Inc. halted its own offering last month due to low investor demand.
Stock in the week’s biggest deal, General Motors, already may be scarce. Investment bankers handling the GM sale have more orders than stock for both the 365 million common shares and 60 million preferred shares that will be sold next week, a person briefed on the sale said yesterday.
Orders for preferred stock amount to more than twice the number of shares, while orders for common stock are four to five times the number available, said the person, who spoke on condition of anonymity because he is not authorized to speak publicly about the sale.
If demand remains high, GM could price the stock at the high end, or above, the $26 to $29 range it expects.
The market for initial public stock offerings has been heating up and providing good returns. The FTSE Renaissance Composite IPO index, which tracks the performance of stocks that had IPOs in the past two years, is up nearly 13 percent this year. By comparison, the broad Standard & Poor’s 500 index has gained 9 percent in that period. Large institutional investors have snapped up most of the shares from new stock offerings.
The General Motors IPO could change that, said Kathleen Smith, an IPO expert and founder of investment adviser Renaissance Capital LLC. Most recent IPO investments have come from funds that specialize in initial public offerings of stocks, she said. After next week, Smith said, managers of smaller portfolios and nonspecialists are likely to take an interest.
But it could prove frustrating for retail investors who want to get in on the deal. The US government has said that smaller investors will be able to participate in the offering of General Motors, which was rescued from near-collapse by taxpayer bailouts worth a combined $51 billion, but brokerages that sell to smaller investors including Charles Schwab and Scottrade aren’t taking part in the offering.
Besides General Motors and Caesars, next week’s big IPOs include management consultant Booz Allen Hamilton Inc., the massive broker-dealer LPL Investment Holdings Inc., and electronics maker Aeroflex Holding Corp.
With 10 deals expected to come to market next week, it will be the most active period for IPOs since 2007, according to Renaissance data. The offerings could raise about $12.5 billion. That’s the biggest week since March 2008, when nearly $18 billion was raised through IPOs.