Cowen IPO Raises $180 Mln as Sale Misses Target Price

2006-07-12 19:16 (New York)

By Elizabeth Hester and Christine Harper

July 12 (Bloomberg) -- Cowen Group Inc., the U.S.

investment-banking unit of France's Societe Generale SA, raised

a less-than-expected $179.5 million today in the first initial

public offering for a Wall Street firm since February.

The New York-based firm sold 11.2 million shares at $16,

according to two bankers involved in the offering. That compares

with a pre-sale range of $19 to $21 and gives Cowen, run by

Chairman and Chief Executive Officer Kim Fennebresque, a market

value of about $240 million.

The sale, coming five months after an IPO by Thomas Weisel

Partners Group Inc. raised $90 million, tested demand for new

financial-services stocks as three more investment banks prepare

to go public and on a day when U.S. stocks suffered their worst

loss in a month.

``They were lucky to get it done,'' said Francis Gaskins,

president of IPODesktop.com in Los Angeles, adding that the IPO

market has become selective. ``It will buy industry leaders, but

it's having a hard time with companies that are secondary in

their business.''

In the past three months, the 12-member Amex Securities

Broker/Dealer Index has fallen 11 percent, the Bloomberg IPO

Index has dropped 3.7 percent and almost 70 companies worldwide

have postponed or canceled initial stock sales.

Cowen is an 88-year-old firm that specializes in health

care, technology, media, telecommunications and consumer goods.

Societe Generale, which acquired Cowen in 1998 for $615 million,

will receive all proceeds from today's offering.

Employee Stake

The firm planned to grant 2.1 million shares, or 14 percent

of the firm's equity, to 84 senior employees. Fennebresque, 56,

stood to receive 975,000 shares, a 6.5 percent stake that's now

valued at $15.6 million. He'll also get $1.9 million in a

deferred bonus and settlement award, according to a pre-sale

regulatory filing.

Cowen managed the sale with Zurich-based Credit Suisse

Group and Merrill Lynch & Co. in New York, assisted by Keefe

Bruyette & Woods Inc. and Sandler O'Neill and Partners LP.

The stock will trade on the Nasdaq Stock Market under the

ticker COWN.

First-quarter earnings at Cowen rose almost fourfold to

$36.5 million. Revenue rose 26 percent to $103.8 million.

The increase followed a 78 percent drop in full-year 2005

net income to $12.1 million, according to the regulatory filing.

Evercore Partners Inc., the merger-advisory firm co-founded

by Roger Altman, BankAtlantic Bancorp Inc.'s Ryan Beck Holdings

Inc. and New York-based Keefe Bruyette & Woods, an adviser to

financial-services companies, also plan to go public.