March 22, 2013 / 3:30 PM / 5 years ago

West Corp fails to impress on second outing on Nasdaq

(Reuters) - Shares of private-equity backed West Corp WSTC.O closed down 6 percent in their first day of trading on the public markets, even after the phone service provider priced its initial public offering below the expected price range.

West Corp shares opened weak at $19 on the Nasdaq, about $1 below their IPO price. The company initially expected to price its offering of 21.3 million shares at between $22 and $25 per share.

David Menlow, president of IPOfinancial.com, said the stock’s performance today is not to do with any fundamental issue as fundamentals are yet to come into play.

“The stock was improperly priced. It seems that most of the orders were at the $19-level but the company apparently held firm for $20 pricing and such a situation usually creates an air of uncertainty among investors,” he said.

“This is a perfect example of an underwriter favoring the issuer rather than the buyers.”

Goldman Sachs and Morgan Stanley were the lead underwriters to the offering.

West Corp provides conferencing services and other communications technology and services to a variety of clients, including hospitals, public safety organizations and corporations.

The company was taken private by a group led by private equity firms Thomas H. Lee Partners and Quadrangle Group for $3.34 billion in 2006, ten years after the company first went public.

The stock closed at $18.86, giving the company a valuation of about $1.57 billion.

West Corp, which raised about $400 million from the offering, is the most high-profile offering among the eight IPOs scheduled for the week.

The company plans to use the proceeds to repay debt. It has about $4 billion in debt as of December 2012.

Omaha, Nebraska-based West Corp competes with AT&T Inc (T.N), Verizon Communications Inc (VZ.N), Cisco Systems Inc (CSCO.O), Microsoft (MSFT.O) and Thomson Reuters Corp (TRI.TO).

The company reported net income of $125.5 million on revenue of $2.64 billion for 2012.

West Corp’s debut contrasts those of other private-equity-backed companies that went public this year.

Bain Capital-backed Bright Horizons Family Solutions Inc (BFAM.N) and Apollo Global Management-backed (APO.N) Norwegian Cruise Line (NCLH.O) have had an impressive run on the markets after listing in January.

Shares of childcare center operator Bright Horizons have risen 61 percent, while shares of cruise line operator Norwegian Cruise have risen 58 percent.

Madison Dearborn-backed Boise Cascade’s (BCC.N) shares have risen 60 percent since their debut on the New York Stock Exchange last month.

Reporting by Ashutosh Pandey in Bangalore; Editing by Supriya Kurane

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