Shares of the futures exchange soared in their public debut Friday as investors flock to the sector amid consolidation talk
Investors appear to see a rosy future for a key futures exchange. Shares of NYMEX Holdings (NMX) jumped out of the gate with a more than 136% gain in price on Nov. 17, as investors cheered the energy futures exchange's initial public offering Nov. 16 in which it sold 6,500,000 shares of its common stock at $59.00 per share.
Nymex is raising $383.5 million during a time when Wall Street is buzzing about the globalizing industry. Stock exchange CEOs have been scrambling in recent months to become the next heavyweight in the world's marketplace.
Nymex said Nov. 16 that it sold 6,500,000 shares of its common stock at $59.00 per share. The next day the stock had already zoomed up to $139.35 after only a couple hours of trading on the New York Stock Exchange.
The company is the world's largest exchange for physical commodity-based futures, and the third
largest exchange in the U.S. for all futures. About 63% of all globally listed energy futures and options in 2005 were traded on its New York
Mercantile Exchange, the NYMEX. Its commodity exchange, the COMEX, was the largest by product volume in trading and clearing precious metals. Using open outcry or electronic trading, its
customers include producers, consumers, institutions, hedge funds, governments and private traders.
"The principal purposes of this offering are 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 a Nov. 16 Securities and Exchange Commission filing.
The company also said it may use some of its recently raised funding to acquire businesses, although it adds that no such deal specifically has been planned and the money hasn't been allocated to that purpose.
The joint book-running managers of Nymex's IPO are JPMorgan and Merrill Lynch & Co. The offering closes on November 22, 2006. Underwriters have a 30-day option to buy up to 975,000 additional shares of common stock to cover over-allotments.
Nymex isn't the only one in the industry to do an IPO recently. NYSE Group's (NYX) CEO John A. Thain took the New York Stock Exchange public in the past year, with spectacular results. Thain is now pushing to buy the European bourse Euronext, for example (see BusinessWeek.com, 11/13/06, "Boom Times for the Big Board?").
Shares of other U.S.-listed financial exchange outfits, like the Chicago Mercantile Exchange (CME) and Chicago Board of Trade (BOT) have also surged this year, and like the NYSe, their stocks are trading near 52-week highs. The comnsolidation wave swept up the two Windy City stalwarts, and they have inked a merger deal (see BusinessWeek.com, 10/17/06, "The Merc and the CBOT: Together at Last").