Shares of Bain Capital-backed Bright Horizons Family Solutions Inc (BFAM.N) rose as much as 32 percent in their market debut on the New York Stock Exchange as investors focused on the largest U.S. child-care provider's leadership in a growing niche market.
The company was listed on the Nasdaq before Bain Capital, the private equity firm founded by Republican U.S. presidential candidate Mitt Romney, took it private for $1.3 billion in 2008.
Bright Horizons' shares closed up 29 percent at $28.32 on Friday. At the closing price, Bright Horizons is valued at about $1.78 billion.
"I get a sense that we have good support for what we've achieved and what we hope to achieve in the next phase of our growth," Chief Executive David Lissy told Reuters.
The child care and early education services provider priced its offering of 10.1 million shares above the expected range at $22 each, raising $222 million.
The company expected to price the offering between $19 and $21 per share. At the IPO price, the company was valued at $1.38 billion.
Bain Capital, which did not sell any of its shares in the offering, will continue to maintain about 80 percent stake in the company.
Private equity-backed IPOs are set to make a come back as firms look to cash in on investments made before the financial crisis.
From January to November 2012, companies backed by PE firms raised $20.5 billion worldwide, down from $38.6 billion raised in 2011 as the Eurozone crisis, slowing growth in China and fears over macroeconomic aspects dulled investor confidence, according to a report by accounting and professional services firm Ernst & Young.
Expected private equity-backed offerings in the year include the BC Partners and Silver Lake Partners-backed operator of satellite services Intelsat Global Holdings S.A and Berkshire Partners and Rhone Group-backed fragrance maker Coty Inc.
"Private equity firms pay attention to companies with healthy income statements while helping them manage costs. The IPO market is very receptive to leaders in niche markets like Bright Horizons," said Francis Gaskins, a partner at IPODesktop.com.
SOLID IPO MARKET
The IPO market has shown signs of recovery after a tough 2012. The more than $1.8 billion in proceeds raised last week by five companies that made their market debuts was the highest weekly amount since October, according to market data firm Ipreo.
"The year is turning out to be pretty solid. There are plenty of deals in the pipeline that will find a lot of buyers as equity risk has reduced and market liquidity has increased. It is going to be a good year," said Josef Schuster, founder of Chicago-based IPO research firm IPOX Schuster.
Founded in 1986, Bright Horizons operated 776 child care and early education centers as of September 30 in the United States, United Kingdom, Netherlands, Ireland, Canada and India.
Bright Horizons provides employer-sponsored child care and early education programs, and manages child care centers for companies, hospitals, universities and government agencies.
Its clients include Johnson & Johnson (JNJ.N), Pfizer Inc (PFE.N), Home Depot Inc (HD.N), the FDIC and the Environmental Protection Agency.
The company recorded a net income of $3.9 million and revenue of $797.5 million for the nine months ended September 30, according to its regulatory filing.
Bright Horizons plans to use the proceeds from the offering to repay debt, and for working capital and general corporate purposes.
(Reporting by Tanya Agrawal in Bangalore; Editing by Roshni Menon, Supriya Kurane)