Monday, April 18, 1994
The decline in the value of biotechnology shares, and the impact
that has had on New York investor David Blech's portfolio, is adding one more
negative factor to the gloomy market for initial public offerings.
Blech's firm, D. Blech & Co., has been one of the last
remaining outlets for companies wanting to go public. But last week's assault
by investors on the companies in Blech's personal portfolio and on the companies
he has underwritten, combined with generally falling share prices, will likely
prompt increased caution on the part of D. Blech.
The firm and its associates are not commenting and choosing
not to refute publicly the spate of rumors that surrounded D. Blech's activities
last week. But according to knowledgeable sources, D. Blech will limit the size
of its deals to $15 million in response to the market's condition. The firm
"will test the waters on smaller and smaller deals until it gets it right -
it's better than not trying," said one source.
Rumors about the level of the firm's capital resources and
Blech's need for cash raged across Wall Street throughout the week. The talk
ranged from the plausible to the wildly improbable - from the bank falling below
its capital requirements, to all of its IPOs being pulled, to marshals shutting
Some, such as the fact that the bank's doors remained open, that its IPOs hadn't been pulled and that it hadn't fallen below its capital requirements, were easily verifiable. But that didn't stop the rumors.