Did The Genpact IPO Price Too Low? (G, GE)

August 2, 2007 by Douglas A. McIntyre

There is one thing companies coming public hate to see, and that is a discounted pricing to their indicated trading range from the original prospectus terms.  Genpact Ltd. (NYSE:G) did just that.  If you consider that the former General Electric (NYSE:GE) unit priced at $14.00 instead of the $16.00 to $18.00 range and then walked right up the trading staircase after opening from $14.00 (and a tad under) up to $15.00 and then $16.00 and then a close of $16.75, you’ll want to scratch your head.  Sure the market closed up again at the end of the day.  That is crucial and the IPO market has been weak.  But what is obvious is that underwriting departments are probably feeling a little spooked after recent debacles in IPO’s of hedge funds, private equity, and even online travel. 

This may actually help some of the IPO’s out there if this stability in the market and a solid IPO close can come.  There are some negatives out there as it was pointed out how GE represents almost 75% of Genpact’s business and with GE still owning more than a 20% stake.  Most of these ex-Conglomerate subsidiaries tend to do well in the markets, so barring the cautionary stance it seems hard betting against one of the spin-offs with "Gen…" in the name.

GE’s business contract runs to 2013 according to the prospectus.  Shares traded over 18 million shares today.

Jon C. Ogg
August 2, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.