UPDATE 2-Edgen Group makes weak market debut

Fri Apr 27, 2012 4:45pm EDT

* Shares close 13.6 pct below IPO price

* Co valued at $400.7 mln

April 27 (Reuters) - Edgen Group Inc, which distributes specialty products to the energy sector, had a disappointing market debut on Friday, as investors remained wary of volatility in the sector.

The company's shares closed at $9.50 on the New York Stock Exchange. It had priced its IPO at $11 per share, below its expected range of $14 to $16.

Edgen distributes specialty steel products like pipes, valves and heavy plates to the energy sector.

"I think investors are trying to avoid the service side of oil and gas business," Morningstar analyst Jim Krapfel told Reuters.

Edgen's business is largely driven by global energy demand. As demand increases, customers raise capital spending on infrastructure, leading to higher sales for the company.

Its peer MRC Global Inc also had a disappointing start at the stock market earlier this month. MRC shares had closed largely flat on their first day.

Baton Rouge, Louisiana-based Edgen is controlled by a set of investors including Jefferies Capital Partners.

The company had a net income of $2.1 million in 2011, compared with a loss of $71.8 million in 2010. Sales rose 31 percent to $1.68 billion during the same period.

It will use part of the IPO proceeds to repay debt and to invest in its subsidiary EDG LLC, Edgen said in a filing.

The company was valued at $400.7 million at close of trade on Friday.

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