WRAPUP 3-Dollar General, rue21 IPOs make strong debuts

* Dollar General up 8.2 pct in NYSE debut

* rue21 shares up 27.9 percent in Nasdaq debut

* Performance could spur more PE-backed IPOs

* Dollar General may become largest U.S. retail IPO ever

* rue21 has 4th strongest first-day jump in 2009

(Adds detail on first day performances, closing prices)

By Clare Baldwin and Phil Wahba

NEW YORK, Nov 13 (Reuters) - Two private equity-owned U.S.
retailers, discounter Dollar General Corp (DG.N) and youth
apparel chain rue21 Inc (RUE.O) rose in their trading debuts on
Friday, in performances that will soothe worries that investor
appetite for buyout-backed initial public offerings has waned.

Dollar General shares finished up 8.2 percent at $22.73 on
the New York Stock Exchange, while rue21 closed up 27.9 percent
at $24.30 on the Nasdaq, in the fourth strongest debut by a
U.S.-listed IPO this year.

Historically, IPOs have risen between 10 percent and 12
percent in their first day of trading.

Dollar General, which is owned by private equity firm
Kohlberg Kravis Roberts & Co [KKR.UL], priced shares at $21,
below expectations, in its initial public offering on Thursday,
and raised about $716 million. KKR bought Dollar General for
$7.3 billion in July 2007.

If the underwriters that managed the Dollar General deal
exercise their right to purchase additional shares, the IPO
will become the largest ever U.S.-IPO by a retailer, with
proceeds of $823.5 million, according to Thomson Reuters data.

KKR still owns 89.5 percent of Dollar General following the
IPO, and analysts said the price was a deliberate effort to
stoke interest in subsequent share issues that would allow KKR
to sell off gradually its remaining stake in Dollar General and
whet appetite for IPOs by other KKR-owned companies.

"It's fairly priced," said Francis Gaskins, president of
research firm IPOdesktop.com. "I'm quite confident you are
going to have a secondary (offering) from KKR selling more of
their stock. They didn't want it to crash and burn."

Despite pricing at the low end of the expected range,
Dollar General was still valued more richly than competitors
such as Dollar Tree Inc (DLTR.O) and Family Dollar Stores Inc
(FDO.N) at the IPO price of $21, according to IPOdesktop data
using annualized earnings of the most recent six month period.

EASIER EXITS?

KKR and rivals such as Blackstone Group LP (BX.N) have
sought to tap the IPO market to divest themselves of companies
in their portfolios.

More than half of the U.S.-listed IPOs since September have
been private equity-backed as those investors have sought exits
after a two-year freeze in the market.

But many, such as those by Fortress Investment Group's
RailAmerica Inc (RA.N) and Welsh Carson Anderson & Stowe's
Select Medical Holdings Corp (SEM.N), have struggled, with
analysts faulting often aggressive pricing and high debt.

Still, Dollar General and rue21's successful debuts will
spur other IPOs, analysts said.

Scott Sweet, a senior managing partner with IPO Boutique,
said Dollar General's strong debut will likely cause hospital
company HCA, which KKR bought with a consortium that included
Boston-based Bain Capital, to attempt an IPO shortly.

"The sheer size of Dollar General's IPO and the fact that
it worked well when many people doubted it would may change
peoples' minds," Sweet said.

Blackstone also recently said it is considering IPOs of up
to eight of its portfolio companies.

Nonetheless, given how most private equity-backed IPOs have
stumbled in recent weeks, some firms are opting simply to sell
their portfolio companies.

BC Partners Ltd [BCPRT.UL] and Apollo Management LP
[APOLO.UL] recently opted to sell Germany's No. 2 cable
operator, Unitymedia, to international cable operator Liberty
Global for $3 billion rather than going public. The deal is
Europe's largest private equity exit this year. [ID:nBNG19819]

rue21

rue21, which operates 500 stores in the United States
geared at youths, raised about $128.5 million in the IPO, which
priced above expectations at $19 per share.

Funds advised by private equity firm Apax Partners, which
is the largest stockholder, did not sell any shares in the IPO.
Their stake in rue21 will fall to 57.9 percent from 62.2
percent.

Rue21's same-store sales, or sales at stores open for at
least a year, rose 4.1 percent in the six months ended Aug. 1,
while overall sales rose 33.3 percent to $233.1 million, with
net income of $8.3 million.

The debuts by Dollar General and rue21 follow Vitamin
Shoppe Inc's (VSI.N) 17.3 percent rise since its IPO last month
and reflect the retail sector's recovery. There had not been an
IPO by a U.S. retailer in the two years prior to these three
IPOs.
(Reporting by Phil Wahba and Clare Baldwin; editing by
Matthew Lewis, Bernard Orr and Andre Grenon)