NEW YORK – Energy exchange NYMEX Holdings Inc. (NMX) shares more than doubled on Friday in the strongest market debut yet this year, bolstered by soaring investor interest in the exchanges sector.
Shares of the company opened up 103 percent at $120 before surging to $139.57 in late morning trading on the New York Stock Exchange, reflecting optimism spurred by Chicago Mercantile Exchange Holdings Inc.'s (CME) $8 billion takeover bid for rival exchange CBOT Holdings Inc. (BOT).
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"With all the consolidation and deals in exchanges, this industry is just on fire," said Ben Holmes, an analyst with Morningnotes.com. "The timing of the deal is absolutely perfect."
The opening day stock surge gave NYMEX a market value of about $12 billion, vaulting it into fifth place among exchanges as ranked by market capitalization, ahead of Nasdaq (NDAQ) and the London Stock Exchange.
NYMEX's opening gains were the largest of this year's IPOs, beating out fast food chain Chipotle Mexican Grill Inc. (CMG), which gained as much as 118 percent on its opening day. The big debut also reflected gathering momentum in the overall initial public offering market.
On Thursday the 6.5 million share offering raised $383.5 million after selling for $59 per share, compared with a $54 to $57 forecast range.
IPO UNDERPRICED?
The gap between the offering price and the market price raised questions about why the offering's underwriters didn't price it even higher.
"NYMEX may have decided that rather than raise the price higher, they would take the publicity," said Francis Gaskins, president of research firm IPO Desktop, of the offering price.
"They don't need the money and this instantly establishes their branding worldwide. That helps in terms of using stock as a currency."
This position will make NYMEX a major player in merger activity among the exchanges, Gaskins added.
Saying there was "no question" about further consolidation among exchanges, NYMEX chief executive James Newsome told CNBC television after the debut that the exchange was "very flexibly positioned to look at all potential opportunities to the benefit of shareholders."
Enormous deals, like the merger of the CME, the world's largest exchange by market value, and its smaller rival, the CBOT, have recently swept the industry.
In March, the NYSE Group Inc. (NYX), which owns the No. 1 U.S. stock exchange, floated its shares, rising 25 percent to $80 on their first day of trading. It is poised to acquire Paris-based rival Euronext.
Last year, IntercontinentalExchange (ICE) and CBOT Holdings Inc., the parent of the Chicago Board of Trade, both soared on their first days on the New York Stock Exchange.
Earlier this year, NYMEX struck a deal to sell a 10 percent stake to private equity group General Atlantic LLC for $160 million.
Underwriters for the NYMEX IPO, led by JPMorgan (JPM) and Merrill Lynch & Co. (MER), have the option to buy an additional 975,000 shares to cover over-allotments.
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