Getting a piece of the IPO pie

An examination of institutional owners of recent high-flying IPOs reveals that, for the most part, no single firm can lay claim to having a lock on top deals.

The owners of such top-performing companies as Internet Capital Group, Commerce One and PurchasePro.com are a diverse lot, ranging from business incubator Safeguard Scientific to office supply retailer Office Depot to an investment arm of the Rockefeller family, according to data mined by Thomson Financial Securities Data's ShareWorld.

These successful offerings also have an impressive number of owners, while public offerings that have underperformed since their debut have had little in the way of brand-name owners.

The business-to-business holding company ended 1999 up some 2000 percent from its debut in August of that year. It includes among its shareholders Pennsylvania-based venture firm Safeguard Scientific, which owns almost an 18 percent stake; Comcast, owner of 9.8 percent; and FleetBankBoston, which controls some 2.7 percent of the company's outstanding shares.

Additionally, company chief executive Walter W. Buckley III owns about 4.8 percent of the company's shares while ICGE officials Kenneth Fox and Douglas Alexander own 4.5 percent and 2.5 percent, respectively. Overall, insiders control about 92 percent of the shares, while institutions own 8 percent.

Commerce One, a business-to-business e-commerce services provider that gained more than 2,700 percent from its offer price in July 1999 by year end, counts among its leading shareholders Morgan Stanley Dean Witter, which owns more than 5 percent; Fidelity Management, which owns 2.44 percent; and Merrill Lynch, which owns 2.3 percent.

PurchasePro.com, another Internet business-to-business services provider, has Office Depot as one of its largest individual shareholders, with a 6.1 percent stake. Investment firms Columbus Circle Investors, Lord Abbett & Co. and Scudder Kemper Investments also own shares in the company.

Sometimes IPOs own other IPOs.

Take the example of VerticalNet. This fast-growing company, which owns and operates several dozen business-to-business Web sites, has Douglas Alexander, a director at Internet Capital Group, as chairman of its board of directors. VerticalNet's largest shareholder is none other than Internet Capital Group, which holds more than one-third of the company's outstanding shares.

Other notable investors include Wheatley Partners, with a 5.2 percent stake; Koch Ventures, with a 5 percent stake; and Boston-based Putnam Investment Management, with a 4.8 percent stake. Other big-name holders include Munder Capital Management and Janus Capital.

Overall, insiders own about 58 percent of VerticalNet's shares, while institutions own some 36 percent of outstanding shares.

Another company worth looking at is Vignette, a provider of Internet relationship software. Shareholders include CNET, the parent of News.com; Connecticut-based Pequot Capital Management; and Lucent Technologies' pension fund.

The bottom line is that while individual investors may have trouble getting into the hottest IPOs, plenty of institutions find easy entrance. Perhaps those seeking a piece of the IPO pie would do better to latch onto those who already have stakes in such deals, whether they be fund managers or companies that own other companies.