NEW YORK (Reuters) - When Bermuda-based Max Re Capital Ltd. was getting ready to sell its stock to the public last spring, the market for new offerings was entering one of its slowest seasons in a quarter century. That's why the insurer insisted two Wall Street firms peddle the offering.

Investment banks like to wage winner-take-all battles for the lucrative rights to handle initial public offerings - fees generally total seven percent of the IPO's value. But in this depressed market, investment bankers have no choice but sharing the spoils with rivals.

"All the banks we were in talks with wanted to be the sole IPO bookrunner," said Keith Hynes, chief financial officer of Max Re. "But we wanted two firms to work hard for the offering." Max Re won, and Morgan Stanley and Salomon Smith Barney had to share the pie and lead the team of IPO underwriters together.

Max Re is one of the 32 companies this year that have used two investment banks to sell their IPO shares, according to research firm Dealogic. That is 46 percent of all the IPOs completed in 2001, more than twice the percentage of jointly-managed IPOs in all of 2000.

In one of the toughest environments in years for taking a company public, IPO candidates are putting increasing pressure on underwriters to join forces with a competitor to manage their deal - and split the fees.

Investment banks don't like the idea, but the competition for the few new stock issues coming to market is fierce, especially after the consolidation seen on Wall Street over the past few years, and they have little choice.

"As a banker, you want to allocate the IPO shares as you want," said Douglas J. Fawell, executive director of equity capital markets at UBS Warburg. "In a joint deal you have less freedom to satisfy your clients."

Max Re came to market on August 13, at the beginning of the worst drought for IPOs since the 1970s. Nevertheless, it raised $192 million, in line with expectations.

"Having two bookrunners surely helped," Hynes said.

Joint lead managed IPOs performed better than the average IPO this year. They are trading on average two percent below their offering price, according to Dealogic, compared with a seven percent average loss for all 2001 IPOs.

For issuers, that further proves that two organisations market a deal better than one.

"You get two for the price of one," said Hynes. "Dealing with two firms caused a few management and communication problems, but overall it increased our reach into the investing community."

Underwriters disagree.

"I don't think you really need more bankers to sell a deal. You may end up having too many cooks in the kitchen," said UBS Warburg's Fawell.

Smaller buyers are not happy with the trend either. "Investors end up getting smaller percentages of each deal," said Walt Morgenthau, senior vice president at Laidlaw Securities, which manages the Insiders Trend Fund, focused on small cap companies.

For bigger investors - who have easier access to IPO shares - having one or two leaders in a deal doesn't make a big difference. "We look at the value of the company, not at the mechanics behind the deal," said Franz Tudor with the Galleon Group, which manages a series of funds specialised in technology and healthcare.

The latest IPO to take advantage of the joint efforts of two banks was Cross Country Inc. Last week the nurse staffing company was brought public by a syndicate led by Merrill Lynch & Co. and Salomon Smith Barney. It raised $132.6 million in its IPO, at the top end of estimates, and on Tuesday closed 18 percent above the offering price.

The trend is set to continue.

Next week, managed healthcare services company Amerigroup Corporation will try to raise about $79 million through Bank of America Securities LLC and UBS Warburg.

And all four the companies slated to debut the following week have convinced their underwriters to share the lead role with another bank. The pie for each bank will be smaller, but it could be even worse.

"They will still make more money than if they were one of the comanagers (who have a nonleader role) in the syndicate," said Max Re's Hynes.