Wall Street mystified by the way IPO fees defy gravity
One of the dark mysteries of Wall Street is that just about the most expensive thing a company can buy there - an initial public offering - never seems to come under heavy pricing pressure.
With bankers scrambling again for a slice of an increasingly busy IPO market, industry experts are wondering if this defiance of gravity and economics may soon be tested.
Wall Street loves IPOs because they command fees well above the 3 per cent fee for underwriting high yield bond sales, the 0.9 per cent fee for corporate bond sales, and 0.25-0.5 per cent for advising on mergers and acquisitions.
Fees on most things that investment banks sell have come down as competition has increased and the techniques used to design and distribute them have become commoditised.
Yet, the cost of an IPO is more resilient. Resources Connection, a staffing consultancy that was the last business to go public in the equity boom of 2000, paid a fee of 7 per cent to its advisers, Credit Suisse First Boston and Deutsche Bank. Stephen Giusto, chief financial officer, called the fee the "price of admission to go public."
While there is some flexibility in the price, something approaching 7 per cent is the norm for most smaller companies. Oddly, though, Resources Connection would have had to pay a very similar fee in the much leaner markets of the last three years as it did at the top of the market. According to Dealogic, the average US IPO fee last year was 6.7 per cent.
The only time a discount is applied is when a large company goes public. Jay Ritter, University of Florida finance professor, says that Resources Connection had to pay 7 per cent because it was valued only at $78m. When Google finally lists, it will pay closer to 4 per cent because the offering will be worth more than $1bn.
Some bankers maintain that IPO pricing has been so resilient because going public has been commoditised less than other activities: it remains a highly skilled art and a once-in-a-lifetime event for most managements, the argument goes.
And yet, elsewhere in the world, the fees tell a different story. Fees for European IPOs average closer to 2 per cent or less and Asian fees closer to 4 per cent. Moreover, in Europe fees have fallen by up to 60 per cent over the past decade as rivals fought for market share with US firms.
European bankers like to describe the US market as a cartel. Five investment banks - Goldman, Morgan, Citigroup, Merrill Lynch, and CSFB - have won the lion's share of IPOs for years, keeping a tight grip on market share thanks to years of relationship-building.
But in 2000, the US Justice Department investigated allegations of price fixing in domestic IPOs and dropped the case a year later.
Those who deny there is cartel, can point to last year's performance of Friedman Billings Ramsey. The small Washington-area investment bank climbed from obscurity to third place in the IPO rankings - admittedly, in a very weak year - while still charging many of its clients 7 per cent.
There are occasional signs of firms undercutting their rivals. WR Hambrecht, a San Francisco-based investment bank, typically charges about 4 per cent to lead a sale and 5 per cent to co-manage. But a small firm like Hambrecht does not have enough clout to force its larger rivals to move with it.
The fact is that many US clients are often less concerned with fees than they are with service. As Stephen Giusto, chief financial officer of Resources Connection, explains: "You only know if the fee they charged was appropriate in retrospect." He says the fee has paid was worth it: the stock opened at $12 a share, closed at $16 and now trades at $36. Plus his investor base has remained stable.
Many US companies are suspicious of discounting. The head of equity capital markets at one European firm said that when he offers US clients a 3 per cent fee the response is either "you can't be any good" or that they consider forgoing a discount "the price of a good relationship."
US banks are then able to take the fat margins they enjoy at home to finance their landgrab elswhere in the world. Menno de Jager, deputy chairman of corporate equity services at ABN Amro says: "There is a feeling amongst European banks that IPOs in Europe are being heavily subsidised by US banks' domestic businesses in order to gain market share."
As the IPO market begins to boom again on Wall Street, no doubt some banks - local and foreign - will try again to make inroads by testing the resilience of pricing.
They will soon find that US companies like their IPOs reassuringly expensive and get the pricing they deserve.
"When you look at the dollars it seems outrageous," Mr Giusto says. "But if there is an efficient process and they get you to the right investors then they earn every penny they charge."
解开华尔街IPO高收费之迷
华尔街一直有一个不解之迷：企业在那里能购买的最昂贵的东西，即首次公开发行(IPO)，似乎从来不会承受定价压力。
当银行家们跃跃欲试，争取在逐渐复苏的IPO市场中有所作为的时候，业内人士则开始怀疑，这种违背经济学规律的现象能否持续。
华尔街对IPO之所以情有独钟，是因为IPO的收费标准，远远高于承销高收益债券的3%，公司债券销售的0.9%，以及就并购事宜提供咨询的0.25-0.5%。
随着竞争的加剧和运作方式的产品化，投资银行提供的多数服务收费都已有所下降。
可是，IPO的收费水平却居高不下。人力资源咨询公司Resources Connection是在股市兴旺的2000年最后一家上市的企业，该公司为此向其顾问瑞士信贷第一波士顿银行(CSFB)和德意志银行(Deutsche Bank)支付了7%的承销费。公司的首席财务官史蒂芬#吉奥斯托(Stephen Giusto)把这笔费用称为"上市的入场费(price of admission)"。
尽管有一些小的回旋余地，但对于多数较小的公司来说，上市的收费标准都在7%上下。但奇怪的是，即便Resources Connection公司在过去三年的熊市中上市，该公司必须支付的费用也与牛市时期相差无几。根据金融数据提供商Dealogic的资料，去年美国IPO的平均收费标准为6.7%。
只有大型企业才能得到优惠的IPO收费。佛罗里达大学金融学教授杰#里特(Jay Ritter)指出，Resources Connection之所以须付7%的收费，是因为它的估值只有7800万美元。相比之下，当搜索网站Google最终上市的时候，它所支付的收费将接近于4%，因为其估值将超过10亿美元。
一些银行家坚持认为，IPO的收费水平之所以居高不下，是因为其运作的商业化程度要低于其他业务。他们辩称：IPO毕竟是需要极高操作技巧的业务，对于多数企业的管理层而言，这也是一次毕生难得的经历。
不过，这种论调并不符合世界上其他地方的实际情况。欧洲IPO的平均收费标准接近2%或更低，而亚洲IPO的收费标准接近4%。更说明问题的是，近十年来，随着(欧洲的)竞争对手与美国银行争相抢夺市场份额，欧洲IPO的收费已降低多达60%。
欧洲的银行家们往往把美国市场描述为一个垄断联盟。多年来，五大投资银行，即高盛(Goldman)、摩根(Morgan)、花旗(Citigroup)、美林(Merrill Lynch)和瑞士信贷第一波士顿(CSFB)，一直占据着IPO市场的大部分。他们借助多年编织的关系网，牢牢控制着市场份额。
2000年，美国司法部曾对国内IPO市场存在价格操纵的指控进行了调查，但在一年后放弃了该项调查。
那些否认存在垄断联盟的人士，可以援引华盛顿地区小型投资银行 Friedman Billings Ramsey 在去年的表现作为例证。去年，这家默默无闻的银行一跃成为IPO业务排行榜上的第三名(当然，这是在市场极为低迷的一年中取得的)，而它对许多客户也实行7%的收费标准。
偶尔也会有一些美国银行以较低收费进行竞争。位于旧金山的投资银行WR Hambrecht一般在担任主承销商时收取4%的费用，在合作承销时收取5%的费用。但是，象Hambrecht这样的小机构，并没有足够的实力来迫使较大的竞争对手仿效它的做法。
事实是，许多美国客户考虑更多的是服务，而不是费用。Resources Connection的首席财务官史蒂芬#吉奥斯托(Stephen Giusto)解释说："只有在上市以后，你才能知道他们的收费是否恰当。"他认为，他们公司支付的费用是物有所值的：公司的股票以12美元开盘，首日以16美元收盘，目前在36美元上下交易。此外，公司的投资者群体一直保持稳定。
许多美国企业对收费折扣抱有疑虑。一家欧洲银行的股票资本市场部门主管说，当他向美国客户提出3%的收费标准时，他得到的回应不是"你们的服务肯定好不了"，就是企业宁愿不要收费折扣，以便能有一个"良好的关系"。
正因如此，美国银行能凭借在国内市场赢得的优厚利润，在世界上其他地方争抢地盘。荷兰银行(ABN Amro)的企业资产服务部副董事长梅诺#德耶格尔(Menno de Jager)说："欧洲银行普遍认为，美国银行在欧洲开展的IPO业务，得到了其国内业务的大力资助，以此扩大市场份额。"
毫无疑问，随着IPO市场在华尔街再次复苏，有些银行 (无论是本地银行还是海外银行)会再次试图打破现有的收费标准，以期进入市场。
而他们不久就会发现，美国企业在心理上更偏爱收费高昂的IPO，因为高价令这些企业放心，而这些企业也自然会得到他们应得的收费标准。
一如吉奥斯托先生所说："从金额上看，收费似乎高得离谱，但假如他们能提供一个高效的过程，为企业引荐合适的投资者群体，那他们所收的每一分钱都是值得的。"
