Love doesn’t need a locksmith, or so the saying goes. In the IPO market, bankers and clients often find they have no need for the lock-up period.

This 180-day period is an agreement between investment bankers and the inside shareholders that they, the insiders, will not sell any of their shares until 180 days after the IPO is priced.

But there is a back door that lets the insiders jump the gun before the lock-up period expires.

The agreement contains a clause stating that the inside shareholders may sell their stock before the lock-up period’s 180^th day. All they need is written permission of their investment manager to do so.

What do you think the investment banker will say when looking at another round of underwriting fees and commissions?

If you’re thinking “yes,” you obviously get what Wall Street is about: the green.

Second helpings

Here’s what happened last week. Two companies that went public earlier this year turned around and offered more stock in secondary offerings before their lock-up periods expired.

- Bucyrus International, a South Milwaukee, Wisconsin-based maker of mining equipment used for surface mining, priced 6.13 million shares at $33 each to raise $202.4 million on Friday, November 12. AIP/BI, a major Bucyrus shareholder, sold all the stock in Friday's secondary offering and received all the proceeds from the sale of the stock. The investment bankers picked up $11 million in underwriting fees, according to the final prospectus. On July 22, Bucyrus priced its IPO of 10.75 million shares at $18 each to raise $193.5 million. Bucyrus sold 7.94 million shares and AIP/BI sold 2.81 million shares in the IPO. The investment bankers picked up $13.5 million in underwriting fees for taking Bucyrus public.

The 180-day lock-up period is set to expire on January 19, 2005. But it may turn out to be a non-event. Insiders were selling stock 112 days after the IPO was priced.

-Cabela’s, a specialty retailer of hunting, fishing, camping, and related outdoor merchandise based in Sidney, Nebraska, priced 10.5 million shares at $22.50 each to raise $236.3 million on Wednesday, November 10. All the stock was offered by shareholders. JPMP Capital Group and McCarthy Group were among the sellers. The investment bankers picked up $9.5 million in underwriting fees. On June 25, Cabela’s priced its IPO of 7.81 million shares at $20 each to raise $156.3 million. Cabela’s sold 6.25 million shares and JPMP Capital Group and McCarthy Group sold 1.56 million shares. The investment bankers picked up $10.5 million in underwriting fees in Cabela’s IPO.

The 180-day lock-up period is set to expire on December 22. Once again, it may turn out to be a non-event. Cabela’s insiders were selling stock 138 days after the IPO was priced.

Another piece of the real estate pie

Five months to the day after it went public, a well-known real estate company filed plans last week for a follow-on, or secondary, offering of stock.

- C.B. Richard Ellis Group, based in Los Angeles, is a commercial real estate company offering services in 48 countries. It filed plans on Friday for a follow-on offering to price 15 million shares to raise $448.8 million. The offering will consist solely of shares to be offered by affiliates of Blum Capital Partners. On June 10, C.B. Richard Ellis Group priced its IPO of 24 million shares at $19 each to raise $456 million. The company sold 7.7 million shares and selling shareholders - Blum Strategic Partners, FS Equity Partners International, California Public Employees’ Retirement System, and DLJ Investment Partners - sold 16.3 million shares. The investment bankers picked up $27.4 million in underwriting fees for taking C.B. Richard Ellis public.

The 180-day lock-up is set to expire on December 7. The follow-on filing in which insiders said they plan to sell stock came just 155 days after the IPO was priced.

Zip it up

The best of last week’s five IPOs was ZipRealty, a full-service residential real estate brokerage company based in Emeryville, California.

Its performance outshone the other four deals priced last week:

-ZipRealty operates in 12 major metropolitan areas and online. The real estate company priced 4.55 million shares at $13 each to raise $59.2 million on Wednesday. The IPO closed on Thursday, November 11, its opening day, at $16.30 per share - up 25.4 percent from its initial offering price. On Friday, ZipRealty’s IPO closed at $16.47 per share – up 26.7 percent from its initial offering price.

One of the five IPOs priced last week did not start trading. It was China Netcom Group, which priced 47.1 million American Depositary Shares at $21.82 each to raise $1.03 billion on Tuesday, November 9.

The China Netcom deal is set to trade this Tuesday, November 16, on the New York Stock Exchange, and the next day on the Hong Kong Stock Exchange. The Chinese underwriting rules require the delay between pricing and trading. When a Chinese company’s shares are listed both in China and the United States, the Chinese regulations are followed.

The rest of last week’s IPOs also did well in the aftermarket.

The big surprise was:

- Copano Energy, an energy limited partnership (LP) based in Houston with networks of natural gas gathering and intrastate transmission pipelines in the TexasGulfCoast region, priced 5 million common units at $20 each to raise $100 million on Monday, November 8. (LPs sell units instead of shares.) The IPO closed its opening day at $23 per common unit - up 15 percent from its initial offering price. The IPO closed on Friday at $23.22 per common unit - up 16.1 percent from its initial offering price.

IPO professionals were surprised by the Copano deal’s strength. Copano Energy plans a quarterly distribution of $0.40 per common unit, or $1.60 per common unit, annualized to yield 8 percent based on its initial offering price. Income securities usually do not trade sharply higher in the aftermarket.

The state of the IPO market so far in 2004

As of the market’s close on Friday, bankers had priced 193 IPOs this year, which excludes four unit offerings consisting of common stock and warrants.

The 2004 scorecard:

193 IPOs priced.

147 IPOs closed above their initial offering prices.

46 IPOs closed below their initial offering prices.

Average gain: Up 27.99 percent.

The Nasdaq Composite Index for the year-to-date: Up 4.09 percent.

Those numbers alone explain why some savvy investors are willing to take a chance on IPOs.