Bloomberg News

Penson Worldwide Shares Rise on First Trading Day

May 17, 2006

Shares of Penson Worldwide Inc. (PNSN:US), a Dallas-based clearing company that processes securities trades and makes margin loans, rose 15 percent on their first day of trading.

The stock climbed to $19.50 from its $17 initial offering price on the Nasdaq National Market, giving the company a market value of about $467 million. Earlier today it reached $19.99.

Penson raised about $126.8 million in the initial stock sale, the company said today in a statement, five years after scrapping its first attempt to sell shares to the public because the market was ``not sufficiently attractive.''

``We've experienced steady growth in revenue, steady increase in volume and our technology offering has been widely accepted,'' Daniel Son, Penson's president and co-founder, said in an interview. ``We think it's the right time to come public.''

Penson, which gets about 86 percent of revenue from its securities clearing business and related interest income, sold about 7.46 million shares at $17 each, the top end of an expected range of $15 to $17.

The company, which competes with clearing units of rivals including Bear Stearns Cos., Merrill Lynch & Co. and Goldman Sachs Group Inc., is benefiting from rising interest rates. It earned $4.5 million in the first quarter, up from $124,000 in the same period a year earlier.

Consolidation

Trading in New York Stock Exchange-listed stocks rose 13.7 percent last year, according to the exchange's Web site. The increase in volume came as the Standard & Poor's 500 Index climbed to a four-year high.

Consolidation in the industry is picking up along with trading volume. Southwest Securities Inc., also based in Dallas, said in March it planned to take over the clearing business of a subsidiary of TD Ameritrade Holding Corp.

For companies in the clearing business ``there's been a tremendous amount of consolidation, which is good for the consolidators,'' said William D. Felder, Southwest's president and chief executive officer.

As trading in the stock market increases, companies are making more on the volume of trades cleared as well as margin loans, Felder said.

JPMorgan Chase & Co. and Credit Suisse Group managed the IPO with four other firms, which have the option to buy an additional 1.1 million shares. The company trades on the Nasdaq National Market under the ticker PNSN.

To contact the reporters on this story: Elizabeth Hester in New York at ehester@bloomberg.net; Suzy Assaad in New York at assaad@bloomberg.net

To contact the editor responsible for this story: Erik Schatzker at eschatzker@bloomberg.net.


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