Stock market volatility, marked by perilous plunges and nosebleed ascents, is playing hob with sponsor exits of portfolio companies. Consider Wesco Aircraft Holdings Inc., the aerospace equipment supplier backed by The
Wesco shares ended their first day of trading flat at $14.92 on July 29, as the Dow Jones Industrial average was beginning its late-summer swoon. Wesco had priced its initial public offering at $15 a share, below its expectations, sister news service Reuters reported. The IPO, which priced below the previously set $15.50-$17.50 range, raised $315 million. At this price, the company has a market value of about $1.28 billion.
IPO investors are trending toward offerings that have been priced above their expected range and largely ignoring those that did not, according to some analysts. “The IPO market sees two different types of investors,” said Josef Schuster, founder of IPO investment firm IPOX Schuster LLC. “First, the older, institutional investor that looks at the balance sheet and growth prospects of the company. Second, there is participation from indiscriminate traders who just want to fill up the books and end up jacking the stock.”
Shareholders, including Carlyle and Wesco’s Chief Executive Randy Snyder, sold 21 million shares. Wesco did not sell any shares in the offering. Carlyle will hold a 65.5 percent stake, while Snyder will hold a 13.8 percent stake in the company after the IPO. Wesco filed its IPO paperwork with U.S. regulators in April, expecting at the time to raise up to $300 million.
Wesco, which was founded in 1953, was bought by Carlyle Group in 2006 for an undisclosed sum in a transaction that was advised by the now-defunct Lehman Brothers. The company counts Boeing, Bombardier, BAE Systems, Lockheed Martin, Northrop Grumman and Raytheon among its customers
(Brenton Cordeiro is a correspondent for Reuters in New York; Tanya Agrawal also contributed reporting.)