UK care homes operator Southern Cross completed its IPO, with pricing coming at the bottom of the price range, but quickly traded up on its debut as excess demand pushed the stock higher due to few sellers.
The deal was priced at 225p per share but the stock closed the first day at 270p, up 20%, with less than 15% of the shares changing hands.
The deal had found good UK and US interest to leave the book well covered at the bottom of the range. However, the orders were sufficiently sensitive for the leads to set pricing at the bottom of the range and cut orders back enough to create some demand in the aftermarket.
The deal was structured around target proceeds, so 77.8m primary shares were issued to raise £175m for the company and 11.1m secondary shares sold to raise £25m, irrespective of where pricing came in the 225p–280p range.
Most of the secondary shares come from private equity backer Blackstone, but management and employees sold 3.6m.
With a free-float of 47% the company had an at-issue market capitalisation of £423m. Blackstone has also provided a 10% greenshoe. Morgan Stanley and UBS were joint bookrunners. Blackstone has seen its holding fall from 88% to 48% pre-shoe, and to 43% if the greenshoe is exercised.