Banks are making strides as underwriters of initial public offerings, leading a record 16.7% of deals in the second quarter, Securities Data Co. reported.
The industry's advance from a 10.2% market share in the first quarter was fueled to a large extent by acquisitions. In the past year three big banking companies-Bankers Trust Corp., NationsBank Corp., and BankAmerica Corp.-have snapped up some of the top IPO firms.
Observers said banks are also getting better at spotting opportunities to underwrite stock offers for their existing corporate customers.
"Banks focus on smaller to mid-cap companies, and these are the ones that are going to do IPOs," said Harold Schroeder, a bank equity analyst with Keefe, Bruyette & Woods Inc. "Commercial bankers may be more likely to become aware of these opportunities."
Bankers Trust ranked ninth among IPO underwriters, leading the banks last quarter. Others that placed high were Deutsche Bank (10th), BankAmerica (11th), Union Bank of Switzerland (12th), J.P. Morgan & Co. (14th), and NationsBank (15th.)
Together, BankAmerica and NationsBank-which plan to merge in the fourth quarter-would have ranked ninth by the second-quarter standings. But BankAmerica has agreed to sell its investment banking subsidiary, Robertson Stephens, to BankBoston Corp.
That should give a lift to BankBoston, which obtained the authority to underwrite equities last year but has not cracked into the top 25.
Meanwhile, proceeds from domestic IPOs edged up in the second quarter from the comparable period last year. American companies raised $11.8 billion with IPOs in the second quarter, up 10%.
Higher stock prices and larger deal sizes helped fuel the rise, observers say.
"Though overshadowed by the abundance of debt offerings, the reports on the demise of the equity market are highly exaggerated," said Richard Peterson, a market analyst with Securities Data.
High-tech companies-including computer technology, biotechnology, and telecommunications-shot up to $4.4 billion of new offerings in the second quarter. That is nearly 25% of IPO volume, compared with 17% a year before, Mr. Peterson said.
More than $1.3 billion of new issues were done by computer equipment makers alone, an increase of about 33%.
The domestic media and telecommunications sector made the most spectacular gain, leaping more than 200% from a year earlier to $1.9 billion of new issues.
Some high-tech issuers were scrambling to cash in on their segment's current popularity. "There's no question that some people were trying to catch the train before it leaves the station," said Dick Smith, the senior managing director in charge of equities syndication at NationsBanc Montgomery, NationsBank's securities subsidiary.
Internet and computer networking companies continued to shine in the second quarter, Mr. Smith said, the IPO market was hottest at the start of the quarter. "It became increasingly difficult to complete deals toward the end," he said.
The emphasis on size may be one reason the market has seen a sharp decline in the number of venture-backed companies going public this year, observers said. But the total sum raised by venture-backed companies going public was still propelled higher by lofty stock prices.
BancAmerica Robertson Stephens investment bankers led equity underwriters in bringing venture-backed companies public this year, said Jesse Reyes, director of Venture Economics, a subsidiary of Securities Data. Fourteen of the 18 new equity issues the company undewrote last year were for venture capital firms.