UPDATE 1-Shares of Continental Building Products rise in U.S. debut

Wed Feb 5, 2014 2:46pm EST

* Shares open at $14.66, above IPO price $14

* Shares hit high of $15.75 (Add details, analyst' comment, updates share movement)

Feb 5 (Reuters) - Shares of Continental Building Products Inc, controlled by private equity firm Lone Star Funds, rose as much as 13 percent in their market debut, valuing the company at about $694 million.

The company raised $165.2 million after its initial public offering of 11.8 million shares was priced at $14 per share, significantly below its expected range of $16-$18.

The Reston, Virginia-based company's shares opened at $14.66 and touched a high of $15.75 on the New York Stock Exchange on Wednesday.

Continental Building Products had debt of $465.2 million as of Sept. 30, giving the company an enterprise value of about $1.08 billion at the listing price.

France's Lafarge sold its gypsum business in North America for $700 million to Lone Star in June as part of the cement maker's efforts to shed non-core assets.

"The IPO is a very quick turnaround, less than a year, for the private equity fund that bought the company in 2013," said Jay Ritter, IPO expert and professor of finance at University of Florida.

Continental Building posted a net loss of $2.8 million on revenue of $287.9 million in the nine months ended Sept. 30.

The company is expected to benefit from a recovery in the U.S. housing market as stabilizing mortgage rates and signs of an economic recovery spur demand for new residential and commercial construction.

"The recovery in the housing market has allowed the company to begin covering its large fixed costs after a number of years of depressed sales and profits", Ritter said.

Although the U.S. stock markets have not got off to the best of starts in 2014, with the Dow Jones Industrial Average Index down nearly 7 percent, the IPO market has fared relatively well.

Out of the 16 IPOs priced this year, 11 are trading above their offering price, according to IPO-tracking website Iposcoop.com.

Citigroup Global Markets Inc, Credit Suisse Securities (USA) LLC, Barclays Capital Inc, Deutsche Bank Securities Inc and RBC Capital Markets LLC were the lead underwriters of the offering.

Continental Building shares were up 11 percent at $15.55 in afternoon trading. (Reporting By Neha Dimri in Bangalore; Editing by Savio D'Souza)

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