NEW YORK (Bloomberg) ? Shares of Bermuda-registered Lazard Ltd., the investment bank that raised $855 million in an initial public offering, fell on their first day of trading as underwriters including Goldman Sachs Group Inc. failed to keep the stock above its sale price.

The stock, priced at $25 late yesterday, declined $1, or four percent, to $24 on the New York Stock Exchange today as almost 35 million shares changed hands. The Amex Securities Broker/Dealer index, which includes Lazard rivals such as Morgan Stanley and Lehman Brothers Holdings Inc., fell 0.4 percent.

"When you see it trading near the offer price like that it means the underwriters are supporting the stock," said Steven Rattner, a former Lazard vice chairman who's now managing principal at New York buyout firm Quadrangle Group LLC. "You normally want to see it go up ten percent."

The decline breaks a streak of IPO gains for investment-banking partnerships that decided to go public. Greenhill & Co., the securities firm founded by mergers and acquisitions banker Robert Greenhill, rose 17 percent on its first day of trading on May 6, 2004. Goldman itself surged 33 percent on its first day six years ago. Greenhill completed its IPO in May, 2004 at the start of the biggest year for mergers since 2000.

Large mergers including Sanofi-Synthelabo's $70 billion purchase of Aventis SA and JPMorgan Chase & Co.'s $55 billion takeover of Bank One Corp. encouraged investors about the growth potential of Greenhill's merger business.

Chief executive officer Bruce Wasserstein is taking Lazard ? which is registered in Bermuda but has its operating headquarters in New York ? public at a time when many M&A experts expect little growth compared with last year. Investors haven't seen the same number of large deals this year and are sceptical the M&A market is poised for another boom.

Lazard sold 34.2 million shares at the low end of its $25 to $27 pricing range. That valued the New York-based firm at about $2.5 billion.

Trading close to the IPO price is "not a good sign," said fund manager Michael Binger who helps manage $2.5 billion for Thrivent Financial in Minneapolis. "When you can invest in Lehman or Goldman, why invest in Lazard?"

Goldman, which led the offering, Citigroup Inc., Lazard, Merrill Lynch & Co., Morgan Stanley, JPMorgan Chase & Co. and Credit Suisse First Boston earned $1.25 a share, or a total of $42.7 million, in underwriting fees, Lazard said in a filing today with the U.S. Securities and Exchange Commission.

"Goldman Sachs is not going to let this deal fail," said Sal Morreale, a sales trader at Cantor Fitzgerald & Co. in Los Angeles who follows new issues. "It's too high-profile of a deal."

The IPO, the largest by a securities firm since Goldman's in 1999, cements Wasserstein's control over 157-year-old Lazard, a firm founded by the family of Chairman Michel David-Weill as a dry goods business in New Orleans.

Wasserstein, 57, had agreed to take Lazard public this year or quit. With the IPO completed, David-Weill will leave and share $1.6 billion with his allies.

At a meeting with potential investors last week, Wasserstein said Lazard was poised to capitalise on a boom in M&A that may last as long as seven years. This year, the biggest for M&A since 2000, Lazard ranks tenth.

Greenhill, which also is based in New York and employs about 130 people, raised $100.6 million a year ago. Its shares have jumped about 76 percent since then.

"Lazard may have a little harder time than Greenhill given that the M&A market has slowed down of late," said Craig Smith, who helps manage $84 billion at David L. Babson in Boston. "They're getting their ownership structure straightened out, but I don't think they have the same momentum as Greenhill."

Lazard had 2,399 employees at the end of last year.

Wasserstein, 57, and his family trust have 11.7 million shares of Lazard, now valued at about $300 million. He'll also receive a salary of at least $4.8 million in 2005, 2006 and 2007. That's a 60 percent increase from the $3 million he got in 2004, 2003 and 2002.

Lazard sold $550 million of ten-year notes, less than the $650 million it planned, in addition to the stock. The bonds have the lowest investment-grade credit rating at Standard & Poor's and the top high-yield, or junk, rating at Moody's Investors Service. The company also sold $400 million of notes convertible into stock.