Nymex Holdings in its first day as a publicly traded company Friday soared to more than double its initial public offering (IPO) price, opening up 103% higher at $120 per share before climbing to a high of $152 on the New York Stock Exchange. The newly public company's share price finished the day at $132.99.
Coming in above expectations, Nymex Holdings raised $383.5 million late Thursday through its much anticipated IPO. The company and its private stockholders sold a combined 6.5 million shares through the offering, which had been expected to debut at between $54 and $57 per share, but achieved a $59 price (see Daily GPI, Nov. 15).
"The IPO was well-hyped," said one broker. "It is obvious that they undervalued the stock. The opinion is while they didn't raise as much money as they could for the exchange, they raised a heck of a lot of money for the members. While a lot of the members were millionaires before, they are even more well off now. Members can't sell it for six months, but 90,350 shares were allotted per member seat. Multiply that by $132.99 and we are talking major money. All you have to do is the math, which comes out to $12 million and change per seat."
The $12 million is an interesting number considering that the company sold a New York Mercantile Exchange division membership seat on Nov. 6, which includes 90,350 shares in Nymex Holdings, for a record $5.8 million. The new sale bests the previous record of $5.5 million, which was set back on April 28 of this year.
According to analyst Francis Gaskins of Gaskins IPO Desktop, Nymex's market cap of $11.8 billion at $135 per share is the fifth largest trading exchange market cap worldwide behind the Chicago Mercantile Exchange ($18.5 billion), Deutsche Borse ($16.3 billion), the New York Stock Exchange ($14.9 billion) and Euronext ($12.3 billion). The Hong Kong Exchange comes in sixth at $9.4 billion.
Nymex informed the Securities and Exchange Commission (SEC) earlier in the week that it was increasing its share expectation price from between $48 to $52 to between $54 to $57, while also expanding the offering to 6.5 million shares from 6 million shares. The frenzy over Nymex's IPO has also boosted the share prices of other exchanges.
After receiving a boost earlier in the week following Nymex's revised expectations, chief Nymex competitor, IntercontinentalExchange (ICE), punched above $100 per share Friday for the first time to record a high of $105.40 before closing at $101.20, up $6.60 (6.98%). ICE launched a very successful IPO last November (see Daily GPI, Nov. 17, 2005). Some market watchers see Nymex's IPO as a leveling of the playing field in the commodity exchange arena.
Nymex's share price jump in its first day of trading outpaced some of the other exchanges in the arena. ICE's Nov. 16, 2005 IPO saw a 51% increase over its $26 price, while the Chicago Mercantile Exchange (CME) rose 23% above its $35 offering price on Dec. 5, 2002. The Chicago Board of Trade (CBOT) increased 49% over its IPO price of $54 a share on Oct. 18. 2005.
On Friday, the CME closed $5.05 lower at $535 per share, while the CBOT finished $1.07 lower at $158 per share.
In a previous SEC filing, Nymex said the principal purpose of this IPO was to "obtain additional capital, create a public market for our common stock, facilitate our future access to public equity markets and provide increased visibility in a marketplace in which a number of our current and potential competitors are or will be publicly held companies," Nymex said in its filing.
Nymex said that other than a payment of $10 million to the owners of Comex Division memberships, Nymex has "no specific allocations for the use of proceeds from this offering" at this time. Nymex is listed on the New York Stock Exchange under the symbol "NMX."
Nymex's revised offering earlier in the week took the IPO's potential value from $288-312 million to $351-370 million (see Daily GPI, Nov. 13). Thursday's activity bested those numbers.
Nymex, which operates the 134-year-old New York Mercantile Exchange, was held by its members (90%) and General Atlantic (10%), which bought into Nymex back in March for $160 million (see Daily GPI, March 14). At that time, Nymex said General Atlantic was the best partner to help make Nymex more valuable through a possible IPO.
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