UPDATE 2-AGA Medical IPO prices below lowered expectations
* AGA shares priced at $14.50 in IPO, below reduced range
* AGA sells 13.75 mln shares, raises $199.4 mln
* Chinese ZST Digital Networks falls 6 pct in debut (Adds IPO pricing, analyst report, ZST pricing and debut)
NEW YORK, Oct 20 (Reuters) - AGA Medical Holdings Inc (AGAM.O), a maker of devices for heart defects and vascular diseases, priced shares in its initial public offering at $14.50 each, below its reduced estimate, becoming the latest private equity-backed deal to face weak demand.
AGA, whose largest shareholder is private equity firm Welsh, Carson, Anderson & Stowe LP, sold 13.75 million shares and raised $199.4 million, below the $275 million it had previously estimated.
Minnesota-based AGA lowered the expected price range for its IPO on Tuesday morning to between $15 and $16 per share from $19 to $21 a share.
Shareholders increased the number of shares they planned to sell to 6.7 million shares from 5.25 million, and the company lowered the number it planned to sell.
Welsh, Carson, Anderson & Stowe will still own 51.7 percent of the company after the IPO.
Analysts had voiced concern that the earlier price range was too aggressive compared with peers such as larger rivals Boston Scientific Corp (BSX.N) and Medtronic Inc (MDT.N) and whether the company could compete with them.
"These firms have extensive product offerings and larger salesforces which foster stronger relationships with cardiac surgeons," Morningstar analyst, Meera Veenu, wrote in a research note on Tuesday.
AGA also may have suffered from the fall on Tuesday in the shares of medical device makers.
Boston Scientific fell about 15.7 percent after it cut its profit outlook and warned that a tax in the health care reform bill could harm the medical device industry. [ID:nN20459334]. Medtronic fell about 3.5 percent.
AGA is scheduled to begin trading on Nasdaq on Wednesday under the symbol "AGAM."
A number of private equity backed IPO's have struggled with weak demand, including the offering by a company owned by Welsh, Carson -- that of hospital operator Select Medical Holdings Corp (SEM.N)-- which also priced below range last month and is down 2.7 percent from its IPO price.
Last week, RailAmerica (RA.N), owned by private equity funds managed by Fortress Investment Group LLC (FIG.N), lowered its price range ahead of its IPO, while Fortress sold one million more shares than expected. Shares fell 8 percent in their debut. Continued...
