CHICAGO (Reuters) - The Chicago Board Options Exchange, the biggest and oldest U.S. options market, is planning an initial public offering of at least $292 million, according to a regulatory filing on Tuesday.
The planned CBOE offering comes as the U.S. market for IPOs is struggling. The Greek debt crisis and the May 6 unexplained plunge in U.S. stock prices have caused a number of deals to be canceled, postponed or repriced. Some analysts have said there could be a broader dampening effect on new issues.
But as the parent of the last free-standing major North American financial exchange, CBOE Holdings Inc. is likely draw strong interest, analysts said. Shares are expected to start trading on Nasdaq OMX’s (NDAQ.O) Global Select Market under the ticker symbol “CBOE” on June 15.
“Everybody knows that exchange offerings have been very hot,” said Josef Schuster, founder of Chicago-based IPO research house IPOX Schuster LLC in Chicago. “They are very rare and there is a lot of demand. The offering is expected to have a high initial return.”
CBOE will sell 9.6 million shares in the offering, while members and brokers handling the IPO will sell 2.1 million shares, it said on Tuesday.
Shares will be offered at a minimum price of $25 apiece, with a share price range provided sometime before June 1, CBOE said in a filing in April.
With 102.6 million shares outstanding after the offering, the minimum share price would value CBOE at $2.57 billion.
“This company has very good upside from these levels,” said Thomas Caldwell, a Canadian fund manager who has been buying CBOE seats for years and will be among its biggest shareholders after the IPO.
Schuster, of IPOX, agreed. “The offering terms speak for a quite strong initial reaction for the stock,” he said.
By selling only a small percentage of the total shares outstanding, he said, CBOE is setting itself for a surge in valuation reminiscent of the sharp first-day gain in Chicago Board of Trade stock in its 2005 IPO.
”CBOE is a small offering but a big brand,“ Schuster said. Everybody uses it. Everybody knows the history.”
CBOE was founded in 1973 by members of the Chicago Board of Trade, sparking an industry that now handles millions of contracts a day through eight U.S. exchanges.
Goldman Sachs & Co. is underwriting CBOE’s IPO.
Book running managers include BofA Merrill Lynch, Barclays Capital, Citadel Securities, Citi, J.P. Morgan and UBS Investment Bank, the filing said.
Additional reporting by Clare Baldwin in New York; Editing by James Dalgleish, Diane Craft, Leslie Adler