DivX IPO Update: DivX Offers Shares to Retail Investorsposted by MR WAVETHEORY at 9/06/2006 04:34:00 PM
Why is DivX Offering Shares to Retail Investors?
Typically, underwriters let retail investors into details when either the company asks them to as in the case of Google or when the IPO market is very weak as in the case of Vonage. Allowing retail investors into the deal can serve several purposes:
1) Increase demand for IPO shares if demand for new offerings is weak.
2) Generate buzz among retail investors so they talk about the company.
3) Get attention of media outlets who undoubtedly like to cover tech IPOs.
Who are the DivX Underwriters?
DivX has five underwriters: JP Morgan, Banc of America Securities, Cowen and Company, Canaccord Adams and Company, and Montgomery Securities LLC. The lead bookrunner is JP Morgan. According to Thomson Financial's 2Q investment banking league tables, JP Morgan was ranked #5 in 2Q 2006.
It is important to look at the underwriters because they provide post-IPO trading support of the new issue. A higher ranked underwriter often means better post-IPO performance. #5 is good. Getting a #1 would have been great.
When an underwriter is not confident of institutional support, it often goes to distribute its shares to retail. It pays to be cautious when underwriters offer shares to retail investors. After all, with the Vonage IPO still stuck in the rearview mirror, who wants another blowup.
Related DivX Article: Divx IPO: Is It a Good Deal?
Fidelity Alert - New Issue Offerings
Fidelity is pleased to announce that we are able to provide eligible customers* (see *Eligibility below) with the possibility of participating in the following public offering:
Name of issuer DivX, Inc.
Industry Communications Software
Security type Common Stock
Expected size of offering 9,100,000 shares
Expected price range $12.00 - $14.00 per share
Offering type Initial Public Offering
Distribution by The Issuer and Selling Shareholders
Expected pricing date 09/21/2006
To access and download the preliminary prospectus with respect to the offering, please visit https://scs.fidelity.com/customeronly/ipoprosp.shtml.