Babak:
As zippie26 stated there is never an exact time that is predetermined. In the final stages of getting an IPO done, a preliminary prospectus is sent to every Institutional client for their review about a month before the anticipated opening. Next the Underwriters will take the management "on the road" and arrange meetings for those institutions that are interested. Indications of interest are now taken by the Salestraders of the lead Underwriter and the amount of interest (or lack of it) will determine at what price the deal will be done (if it is done) and sometimes even an adjustment of how many shares will be offered is made. Due to the IPO craze of the late 90's, deals are more structured now as to how much each institution is allocated (commissions paid to the firm, post-opening support of the IPO and history of supporting deals, and real long-term interest in the stock), which will be decided by the Syndicate desk of the Underwriter the night before the offering, or sometimes even right before the opening that morning. The Salestraders will now alert the Institutional trading desks of their allotted shares and will take orders for the opening. As a general rule, if an Institution plays an IPO for a "flip" then it will not go to any of the Underwriters to sell it (on an OTC stock) for fear of looking bad and thus jeopardizing their chance of getting shares on the next deal. Instead they will just go to Nite, Herzog, or Spear Leeds and have them sell it, or even try to dump them on Instinet themselves. All of this takes time, as many orders will be in a scale format ("I'll buy 25,000 @ $21, 50,000 @ $20, or 100,000 @ $19, etc.") Many calls will be made to adjust order sizes and prices, and when they finally put it all together they will open the stock. The Institutional traders will be updated as to the expected "opening" price and time, but will never get an exact time. Usually the Salestrader will tell them that the stock will open in about 5 minutes, in which case the stock will open up anywhere from 1 minute to 30 minutes (and in some cases I remember 5 minutes ago!).
Since each deal is different it's just impossible to tell when it will open, but certain firms have general habits that they tend to follow. I remember that Morgan Stanley was the worst when it came to getting an IPO open (sometimes as late as 1:00 PM), and Goldman wasn't much better. Bear Stearns likes to get things done as quickly as possible and usually had their IPO's open within the first hour, and Smith Barney wasn't too bad either. Again, this is back when we had 5 new deals a day, so I'm sure it may be different now, but it's the only thing I can think of that may helpâ¦
Darren
