Shares of TPG Specialty Lending rise about 3 pct in debut

March 21 Fri Mar 21, 2014 9:59am EDT

March 21 (Reuters) - Shares of TPG Specialty Lending Inc , the business development company of private-equity firm TPG Capital, rose about 3 percent in their debut, valuing the company at about $852 million.

TPG Specialty Lending (TSL) raised about $112 million after its IPO of 7 million shares was priced at $16 per share, the low end of the expected range.

TSL's shares opened at $16.05 and touched a high of $16.45 Friday on the New York Stock Exchange.

The business development company (BDC) has raised $1.5 billion from investors, including a $117.1 million commitment from its parent, since its launch in 2011.

BDCs, which are pools of capital that invest in debt of small- and middle-market companies, often go public and pay out at least 90 percent of their annual profits as dividends to avoid corporate taxation.

Demand for BDCs has jumped as tighter lending guidelines and the difficulty of raising capital curbs traditional lenders.

TSL is led by Joshua Easterly, former managing director at Goldman Sachs Group Inc and Michael Fishman, former executive vice president and national director of loan originations for Wells Fargo Capital Finance.

The stake of State of New Jersey Common Pension Fund, the largest shareholder in TSL, will drop to 11.6 percent from 14.4 percent after the offering.

Net proceeds from the offering would be used to repay debt and invest in portfolio companies, San Francisco-based TSL said in a regulatory filing.

The company reported gross internal rate of return of 17.6 percent on investments it has exited from inception through the end of 2013. Net investment income more than doubled to $57.5 million in 2013 from a year earlier.

JP Morgan, Bank of America Merrill Lynch and Goldman Sachs & Co were lead underwriters to the offering. (Reporting by Avik Das in Bangalore; Editing by Savio D'Souza)