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INITIAL PUBLIC OFFERINGS

After a very lean year, IPO filings picking up slowly

By Beth Healy, Globe Staff, 5/21/2002

   

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2001 Mass. IPOs
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If you blinked, you might have missed the Massachusetts IPOs of 2001.

It was a lean year for companies trying to sell shares to the public, as investors large and small continued to digest their losses from the stock market debacle of 2000 and sat on the sidelines through the market's doldrums last year.

Just three Bay State companies floated public offerings in 2001, one in technology, one in science, and one in financial services. Notably missing were the legions of high-tech companies that were the IPO darlings of the late 1990s.

Last year, the environment was more hospitable to companies involved in drugs and life sciences. Venture capitalists were investing money in young companies engaged in those businesses with a vigor that continued into the first quarter of this year. As happened a decade ago, the sciences tend to receive attention from investors in cycles when other sectors are unattractive.

As of March 31, only one of the three local IPOs, Mykrolis Corp.'s, was trading above its offering price -- and even then, it was only by pennies. Mykrolis is a spinoff from Millipore Corp., an established Bedford-based maker of scientific instruments. Mykrolis, which this month moved to its own quarters in Billerica, supplies equipment to semiconductor makers.

"I think it was the quality of the company that allowed us to do it in such a difficult environment," said William Zadel, chief executive of Mykrolis and former CEO of Millipore. Indeed, Mykrolis was no start-up; annual revenues exceeded $350 million in 2000, the year its executives decided it should be split from Millipore. As the businesses grew, Zadel said, it was clear Millipore and Mykrolis would appeal not only to different customers but to different investors.

Semiconductor companies have been hard hit in the technology slowdown, presenting challenges for Mykrolis that Millipore no longer has to address. The timing of Mykrolis' $105 million IPO was fortuitous, Zadel said, coming in August just before the Sept. 11 tragedy chilled markets for the rest of the year.

August "was the last possible time we could have done it," Zadel said. After that, he added, "The business climate got a whole lot worse."

Exact Sciences Corp., a Maynard developer of technology to enable genomics-based detection of certain cancers, went public in January 2001. The stock opened at $14 and then slumped, losing half its value. More recently, it has recovered and is trading 80 cents above its IPO price.

Some of the company's top shareholders include local venture capital backers OneLiberty Ventures and Greylock Partners.

The financial IPO of the bunch is struggling most, as weak markets continue to hurt brokers and investment firms across the industry. Investors Capital Holdings Ltd., a Lynnfield-based brokerage group, was trading at $2.25, well below its $8 offering price, at the end of the first quarter, and the shares have continued to slide.

The Investors Capital shares are thinly traded and held by few outside investors; two-thirds of the shares are owned by chief executive Theodore Charles. Investment bankers and venture capitalists remain gloomy about the IPO market outlook for the rest of 2002, but the pace is picking up. Nationally, IPO filings are double what they were last year at this time, when only 35 companies had filed, reports Thomson Financial, a research firm in New York.

The annual totals show how slow the action is overall, compared with the boom years: There were 351 IPOs in the United States in 2000, 508 in 1999, and 771 in 1996.

Investors may not be too eager to see a return to the go-go IPO days, though. According to the National Venture Capital Association, if you had purchased shares of every venture-backed IPO that hit the market over the past three years, you'd have lost 15 percent a year. That's worse than Nasdaq's 9 percent average annual decline over that period.

Beth Healy can be reached at bhealy@globe.com.


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