John Hancock Launches IPO
BOSTON (AP) _ John Hancock Financial Services Inc. completed its long-awaited initial public offering Thursday on the New York Stock Exchange, making it the first of a wave of big insurance companies to complete an IPO.
Hancock sold 102 million shares at $17 apiece late Wednesday, raising $1.73 billion. Shares opened Thursday at $17.75, but drifted slightly lower to $17.62 1/2 at 5:15 p.m.
``We’re happy that the culmination of this long trip has come, and we’re looking forward to becoming a successful stock company,″ said Stephen L. Brown, the company’s chairman and chief executive officer.
He brushed off the lackluster response of some Wall Street insiders who had earlier expressed concerns about a variety of factors that could affect Hancock’s new stock, including higher interest rates and what some complained were slow-growing profits and premiums.
``In talks with a variety of investors, we found people were quite impressed with the way we improved our earnings over the years and broadened our products,″ he said.
An additional 229.7 million shares were distributed to policy holders, who had previously owned the company. Most of the money raised will be used to cash out policy holders who are not eligible for stock or decide they don’t want it.
New York-based Metropolitan Life Insurance Co. plans to go public in March in what is expected to be the largest-ever IPO _ a $6 billion, 255-million share deal. Prudential Insurance Co. of Newark-N.J., the nation’s largest life insurer, is also moving ahead with a plan to go public.
Although insurance stocks have been sluggish of late, Irv DeGraw, research director of WorldFinanceNet.com, a Sarasota, Fla.-based provider of financial information, said he didn’t think the increasing number of insurance stocks would glut the market.
``We’ve had plenty of examples of how a big deal or two doesn’t do that,″ he said. He also noted that Wall Street underwriters, who buy stock from companies going public and then sell it themselves, always make sure they have plenty of buyers before offering a new stock.
``If the demand isn’t out there, the underwriters will back away if they think it’s half-baked,″ he said.
The 138-year-old Hancock is completing a transition from a mutual company _ owned by policy holders _ to a stock company, which is owned by shareholders. Company officials say they need to go public to raise capital for new acquisitions in a consolidating financial services industry.
While some IPOs make wild increases on their first days of trading _ such as Akamai Technologies Inc. of Cambridge, whose stock shot up 458 percent on its first day of trading in October _ DeGraw said he expects Hancock to behave like any large blue-chip corporation, with mild ups and downs.
But shareholders will have the final word on whether John Hancock is welcome on Wall Street.
``IPO day for a deal of this size is not representative of much,″ he said. ``Are the people who got all they wanted today going to hold it or are they going to start moving it around? If they start moving it, it’ll go down.″