Crain News Service
NEW YORK -- Although it might not be the most auspicious of times for an initial public offering, the next few weeks may be as good as it's going to get for Neuberger Berman LLC. The deal, underwritten by Goldman Sachs Group Inc., is slated to be priced the week of Oct. 11. The company is selling 7.25 million shares to the public. The firm's principals will own 77% of the company while employees will get an 8.5% stake.
The 60-year-old New York money management firm is suffering along with the rest of the financial services sector. It postponed the IPO last fall when the market tanked and now finds itself swept into the undertow of the foundering mutual fund industry.
"This is not going to be an easy deal to get done," predicted Mary Pat Thornton of investment banking firm Putnam Lovell de Guardiola & Thornton. Declining sales of mutual funds could undermine the industry as a whole and drag down the Neuberger IPO, she said.
Neuberger's share price, set between $31 and $35, means the New York company would find itself with a price-earnings ratio of around 12. That's a 25% discount to the average p/es of other publicly held mutual fund firms, around 16. That pricing might help get the stocks off of the shelves and into the hands of buyers, Ms. Thornton said.
But it may just be cold comfort.
"If you look at where money manager stocks are right now, we've given up the gain of the last two years," she added.
Indeed, the Putnam Lovell index of 17 publicly traded money managers is down 1.3% this year. Although the index had a steady runup during the spring, that gain has evaporated in recent months. Of its stocks, seven are down on the year: T. Rowe Price Associates Inc. shares lost 13.5%, United Asset Management Corp.'s are off by 27% and Franklin Resources Inc. are down 3.13%, for instance.
Others are up only marginally. Alliance Capital Management LLC gained 5.10%, AMVESCAP PLC is up 4.55% and Federated Investors Inc. is up 5.52%.