Carlyle-backed HD Supply plans to raise $1.33 billion in IPO

Thu Jun 13, 2013 12:31pm EDT

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(Reuters) - Industrial and construction supplies distributor HD Supply Holdings Inc HDSPY.UL said it planned to raise as much as $1.33 billion in an initial public offering as its private equity owners including Carlyle Group LP (CG.O) and Bain Capital LLC look to gain from a recovering U.S. housing market.

HD Supply, a former unit of Home Depot Inc (HD.N), is offering 53.2 million shares at $22 to $25 each, valuing the company at $4.59 billion at the top end of the range.

The offering comes amid a U.S. housing market recovery after a downturn that led to the 2008 recession. The rising prices for new homes are boosting demand for contractors.

The company was taken private for $8.5 billion by a group including Carlyle, Bain Capital and Clayton Dubilier & Rice LLC.

"Private equity owners had bad timing in buying HD Supply in 2007, just before the housing market collapse," said Jay Ritter, IPO expert and professor of finance at University of Florida.

"It is the right time for them to exit after six years as they can benefit from the low interest rates and a recovering housing market," he said.

The stocks of homebuilders Tri Pointe Homes Inc (TPH.N), William Lyon Homes (WLH.N) and Taylor Morrison Home Corp (TMHC.N) are trading well above their IPO prices.

The highest performing stock in the sector, PulteGroup Inc (PHM.N), has risen about 140 percent in the last year.

HD Supply, which has more than 600 locations across the United States and Canada, generated sales of $8 billion in 2012.

The company plans to use proceeds from the offering to repay debt, a filing showed. (link.reuters.com/jud88t)

Bank of America Corp, Barclays, J.P. Morgan and Credit Suisse are among the lead underwriters of the IPO.

(Additional reporting by Swetha Gopinath in Bangalore; Editing by Don Sebastian)

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