Three Financial IPOs: Longtop Financial Technologies, Pzena Investment Management, Cypress Sharpridge Investments

There are three financial oriented companies due to go public this week: Longtop Financial Technologies (LFT) a technolgy concern that develops software and provides IT services for financial services in China; Pzena Investment Management Inc (PZN) a value-oriented investment management firm in operation since 1995; and Cypress Sharpridge Investments (CYS) a REIT that primarily invests in agency residential mortgage-backed securities.

LONGTOP FINANCIAL TECHNOLOGIES (LFT)

Business Overview (from prospectus)

We are a leading software developer and information technology, or IT, services provider targeting the financial services industry in China. We develop and deliver a comprehensive range of software solutions with a focus on meeting the rapidly growing IT needs of financial institutions in China. According to IDC, an independent market research company, we were the third largest “banking IT solution provider” in China measured by market share in 2006.

Offering: 10.4 million shares at $12.00 - $14.00 per share. Net proceeds of approximately $116.3 million will be used acquire property, acquire IT service companies, pay previously declared dividends, and for general corporate purposes.

Lead Underwriters: Goldman Sachs, Deutsche Bank

Financial Highlights:

Our total revenues increased by 66.0% from $15.2 million in 2004 to $25.3 million in 2005, and increased by 70.8% to $43.2 million in 2006... Our gross margins increased from 82.4% in 2004 to 86.1% in 2005 and decreased to 82.3% in 2006... Our research and development expenses increased from $0.9 million in 2004 to $1.1 million in 2005, and to $1.8 million in 2006... [W]e had net income of $6.6 million in 2004, $12.5 million in 2005 and $8.3 million in 2006.

Additional Resources:

• Company website
• Online road show
• Hoover's Fact Sheet
• Reuters: 'Longtop Financial raises IPO price to $14-$16'

PZENA INVESTMENT MANAGEMENT INC (PZN)

Business Overview (from prospectus)

Founded in late 1995, Pzena Investment Management, LLC is a premier value-oriented investment management firm with a record of investment excellence and exceptional client service. We have established a positive, team-oriented culture that enables us to attract and retain the best people. Over the past eleven and a half years, we have built a diverse, global client base of respected and sophisticated investors. As of June 30, 2007, we managed approximately $30.6 billion across a range of value investing strategies on behalf of institutions, high net worth individuals, and select third-party distributed mutual funds. We generate revenue from the payment of advisory fees earned on the assets we manage for these clients.

Offering: 6.1 million shares at $16.00 - $18.00 per share. Net proceeds of approximately $92.6 million will be used to purchase an aggregate of 6,100,000 membership units of Pzena Investment Management, LLC from its three current non-employee members and therefore the company will not retain any of these proceeds.

Lead Underwriters: Goldman Sachs, UBS Investment Bank

Financial Highlights:

Our total revenue increased by $36.5 million, or 46.4%, to $115.1 million for the year ended December 31, 2006, from $78.6 million for the year ended December 31, 2005... Total operating expenses increased by $267.0 million to $314.0 million for the year ended December 31, 2006 from $47.0 million for the year ended December 31, 2005... Other income increased by $3.4 million to $6.1 million for the year ended December 31, 2006 from $2.7 million for the year ended December 31, 2005.

Additional Resources:

• Company website
• Online road show
• Hoover's Fact Sheet

CYPRESS SHARPRIDGE INVESTMENTS (CYS)

Business Overview (from prospectus)

Cypress Sharpridge Investments, Inc. is a specialty finance company that was created with the objective of achieving consistent risk-adjusted returns by investing across multiple asset classes. We are externally managed and advised by Cypress Sharpridge Advisors LLC. We have elected to be taxed as a real estate investment trust, or REIT, for federal income tax purposes. We completed two private capital raises in February 2006 and December 2006, raising net proceeds of approximately $78.0 million and $105.8 million, respectively.

Offering: 18.0 million shares at $7.00 - $8.00 per share. Net proceeds of approximately $124.0 million will be used to repay outstanding debt.

Lead Underwriters: Bear Stearns, Friedman Billings, UBS Investment Bank

Financial Highlights:

Our net income for the period from February 10, 2006 (commencement of operations) to December 31, 2006 was $1.0 million or $0.11 per weighted-average basic and diluted share outstanding... Net investment income for the period from February 10, 2006 (commencement of operations) to December 31, 2006 was $5.7 million... Net realized loss on investments for the period from February 10, 2006 (commencement of operations) to December 31, 2006 of $0.3 million consisted of losses realized on the sale of subordinated tranches of CLOs and other debt securities.

Additional Resources:

• Company website
• Hoover's Fact Sheet
• Bloomberg: 'Cypress Sharpridge Plans an IPO in a `Hail Mary' for Funding'

Comments

[dmmigman]

Would have been nice to know your thoughts on these, too, which ones to trade etc...

[dmmigman]

Would have been nice to know your thoughts on these, too, which ones to trade etc...