* IPO generated proceeds of $529.7 million
* IPO had 18 underwriters
By Brenton Cordeiro
Nov 16 (Reuters) - Delphi Automotive Plc raised $530 million in its initial public offering -- in a deal that values the company much less than it had hoped for when IPO plans were first being formed.
At the IPO price of $22 a share, the former General Motors parts unit that was once the largest U.S. auto supplier is valued at about $7.22 billion. In May, people familiar with the matter said the supplier could be worth $10 billion to $14 billion.
Delphi, the No.6 auto component supplier in North America last year, priced its offering of 24.1 million shares at the low end of its expected price range of $22 to $24 a share.
“Investor demand for the IPO was pretty weak, I think they had a tough time even covering the book,” said Josef Schuster, founder of iPox Schuster, a fund that specializes in investing in newly public companies.
“It may likely trade down tomorrow.”
Delphi’s shares are expected to begin trading on Thursday on the New York Stock Exchange under the symbol “DLPH.”
Europe being its single largest market accounting for 43 percent of sales may have figured among the risks that bothered investors.
Major automakers are saddled with excess capacity in Europe and retail vehicle sales are under pressure from the deepening uncertainty about the region’s economic outlook.
The global auto market has shown signs of a gradual recovery, but investors remain concerned about the strength of demand in the European and North American markets.
“GM stock is off 40 percent this year, Ford’s off too and a hundred percent of the offering goes back to selling sharesholders,” said Francis Gaskins, an analyst with IPOdesktop.com.
GM’s shares have lost about a third of their value since the company returned to being public about a year ago.
The Delphi IPO consisted of shares sold by some stockholders, including 20.6 million shares from hedge fund Paulson & Co.
Delphi, which emerged from four years in bankruptcy in 2009, itself did not sell any shares in the offering.
“A lot of institutions who would have bought into an IPO in general, may have just stayed away from it because it left a bad taste in inevstors mouths already once,” Schuster said.
The IPO was underwritten by 18 underwriters led by Goldman Sachs and J.P. Morgan.
Delphi climbed out of bankruptcy with GM and hedge funds Silver Point Capital LP and Elliott Management taking a controlling stake in the company.
Earlier this year, it bought back the stakes held by GM and Pension Benefit Guaranty Corp for about $4.4 billion in a bid to simplify its capital structure.
Since 2005, Delphi has whittled down its business and simplified its capital structure. It exited 11 businesses and streamlined its product lines to 33 from 119, according to a filing in May when Delphi first said it would pursue an IPO.
GM remains Delphi’s largest single customer. Including its joint-venture in China, GM still represents 25 percent of Delphi sales.