By Olivia Oran
June 26 Industrial and construction supplies
company HD Supply Holdings raised $957.2 million in an initial
public offering on Wednesday, less than expected, after recent
stock market volatility and rising interest rates led some
investors to take a cautious approach.
The Atlanta, Georgia-based company, backed by Bain Capital,
Carlyle Group and Clayton, Dubilier & Rice, priced 53.2 million
shares at $18.
HD Supply had originally hoped to price shares at a range of
$22 to $25, although underwriters told investors earlier in the
day it was offering shares at a range of $18 to $20, according
to a person familiar with the matter.
Volatility in the equity markets within the last few weeks,
triggered by concerns the Federal Reserve may trim back its
stimulus policies, has led several companies to cut or scrap
Technology products retailer CDW Corp priced shares at $17
on Wednesday after reducing its target price range to $18 to $17
per share from $23 to $20.
Last week, Brazilian cement company Votorantim Cimentos
postponed its $3.7 billion U.S. IPO due to market conditions.
HD Supply, one of the largest distributors of construction,
industrial and maintenance supplies in North America, was trying
to capitalize on a rebound in U.S. housing sector stocks which
had been strong up until the last several weeks.
The housing market recovery encouraged other companies to
hold IPOs earlier this year, including home builders TRI Pointe
Homes Inc and home builder Taylor Morrison Home Corp
, as well as plywood maker Boise Cascade Co.
The pickup in housing has been driven largely by record low
mortgage rates. Worries that rates could rise have caused
concern that the recovery could falter. Shares of homebuilders
like PulteGroup Inc and Lennar Corp have each
fallen over 15 percent in the last month.
HD Supply's high debt load, which stands at around 7.7 times
earnings before interest, tax, depreciation and amortization
(EBITDA) may have also caused pushback from some investors. The
company will use its proceeds to reduce debt.
Bain, Carlyle and CD&R bought HD Supply out of Home Depot
Inc for $8.5 billion in 2007.
HD Supply reported $8 billion in revenues for the fiscal
year ended February 2013, up 14 percent from the same period a
year prior. Adjusted EBITDA rose to $683 million, up 34 percent
from the year prior.
HD Supply is expected to trade on the Nasdaq on Thursday
under the symbol HDS. Bank of America, Barclays, JPMorgan and
Credit Suisse led the IPO.