May Looks to Be a Big IPO Month, Analysts Say

Initial public offerings raised a record amount of capital in April, and May begins with some large, sought-after deals.

Plans call for Ford Motor Co. unit Associates First Capital Corp. to launch a global offering of 60 million shares this week. Securities Data Co. said the deal should be the second-largest in terms of proceeds this year and the seventh-largest U.S. IPO ever.

Analysts expect a warm welcome. “It’s probably the best IPO of the week,” said Manish Shah, editor of the IPO Maven, a publication based in New York that monitors initial public offerings.

The company is among around 30 firms planning to go public this week. Among the others are Designer Holdings Ltd., Loehmann’s Inc., Guangshen Railway Co., Nova Corp. and Millennium Pharmaceuticals Inc.

Associates First Capital provides finance, leasing and related services to about 9.4 million individual consumers and 143,000 business in the United States and abroad. It began operations in 1918 and was acquired by Ford in 1989.

The price range for the offering is $25 to $28, per share. IPO Financial Network Corp., a Springfield, N.J.-based company that predicts opening premiums for IPOs, said the stock could open $3 to $4 higher than the offering price.

“Their story is a story of excellence throughout the ups and downs in seasonality. They are very well run and have a record of growing earnings over the last 20 years,” Shah said.

Associates First had net earnings of $723.1 million for 1995 and assets of $41.3 billion at the end of last year. After the IPO, Ford will hold about 30% of the firm’s Class A common stock. Goldman, Sachs & Co. is the lead underwriter.

Designer Holdings’ IPO is also expected to be a success. The company develops and markets designer sportswear under the Calvin Klein Jeans label. It obtained the exclusive license from Calvin Klein Inc., which owns 5% of the company, for certain types of sportswear in August 1994.

For 1995, it had revenue of $462.1 million, up from $196 million for 1994, and a net income of $11.1 million.

“The Calvin Klein name is a good name, and the financial performance is good,” said William Smith, analyst at Renaissance Capital Corp. of Greenwich, Conn. “The company revitalized a tired line by lowering prices and resizing the lines to suit younger tastes.”

The offering consists of 10 million shares. Underwriter Merrill Lynch & Co. said the price range is $14 to $16 per share. IPO Financial predicts an opening premium of two to three points.

Analysts predicting a return to favor of the retailing sector said that trend should help Loehmann’s.

The specialty retailer had planned to go public last year but postponed the offering. Its 3.57-million share issue is expected to be priced today at $13 to $15 a share, according to underwriter Montgomery Securities.

“The stock will do well, but the company has a tough story to sell because their past performance has not been that great,” Shah said. “Same-store sales,” that is, sales for stores open at least 12 months, “have not been an exciting story. They specialize in the budget and moderate categories of apparel, and margins there have been very tight.”

Loehmann’s had net sales of $386.1 million for fiscal 1995, compared with sales of $392.6 million for the previous year. The company had a net loss of $15 million for 1995, compared with a loss of $1.5 million for fiscal 1994.

IPO Financial sees a premium of 37.5 to 50 cents. “It is not as impressive as it could have been had it not been mired in a significant delay,” IPO Financial President David Menlow said.