THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Sunday, February 9, 1997 TAG: 9702080598
SECTION: BUSINESS PAGE: D4 EDITION: FINAL
SOURCE: By TOM SHEAN
LENGTH: 34 lines
Business owners thinking about taking their companies to the stock market have two key ingredients in their favor: stable interest rates and an abundance of money willing to invest in stocks.
But Robert Natale, editor of the Standard & Poor's investment newsletter Emerging and Special Situations, expects the frenzied pace of initial public offerings to slacken this year.
Fewer IPOs are being registered with the SEC, and in contrast to early 1996, there haven't been a lot of blockbuster deals filed, Natale said.
Still, IPO activity probably will remain strong in a handful of sectors. These include telecommunications, real-estate investment trusts, and American Depository Receipts for state-owned companies overseas being sold to investors.
Telecommunications companies and providers of communications equipment have been expanding in response to the federal deregulation of communications last year, Natale said. More of these companies will be seeking capital.
Meanwhile, the income available from real-estate investment trusts has attracted the attention of investors who once bought electric utility stocks for the steadily rising dividends. Uncertainty about the earning prospects of utilities in a deregulated environment has prompted some investors to drop utility stocks and shift to REIT stocks, Natale said.
By law, REITs are required to return 90 percent of their taxable income to investors. Several of these trusts have benefited from the recovery in commercial real estate and increased demand for apartments.
KEYWORDS: IPO