Nov. 6 (Bloomberg) -- STR Holdings Inc., the solar company that Credit Suisse Group AG’s private-equity unit DLJ Merchant Banking Partners took public, jumped on the first day of trading after its underwriters cut the share price of its initial public offering twice to attract investors.

The maker of plastic film used to protect solar cells climbed $3.10, or 31 percent, to $13.10 at the 4 p.m. close of trading on the New York Stock Exchange. STR raised $123 million selling 12.3 million shares at $10 each, below its reduced range of $11 to $13 apiece. The company’s underwriters, Credit Suisse in Zurich and New York-based Goldman Sachs Group Inc., had sought $13 to $15 before lowering the range yesterday.

While sellers such as New York-based Blackstone Group LP reaped $7.4 billion in the past two months unloading shares in the biggest U.S. stock-market rally since the 1930s, buyers of more than half the IPOs are sitting on losses as they suffer the worst returns on record. STR’s IPO price and its gain today suggest institutional buyers were able to extract bigger concessions from the Enfield, Connecticut-based company’s underwriters after three sales were pulled in the past week.

“There’s a hint of desperation in the IPO,” Francis Gaskins, president of IPODesktop.com in Marina del Rey, California, wrote in an e-mailed message before the IPO.

Private Equity

About 73 percent of the proceeds from STR’s offering will go to DLJ Merchant Banking and other stakeholders, while the solar company will use its portion mainly to repay debt, a regulatory filing before the IPO showed. The IPO valued STR at about $414 million, data compiled by Bloomberg show.

STR had about $257 million in total debt at the end of June, most of which came from financing that DLJ Merchant Banking used to take over the company in 2007. DLJ Merchant Banking and its partners spent $146 million of their own cash and borrowed the rest for the $366 million purchase.

Before the buyout, STR’s predecessor company had about $68 million in total debt.

On average, existing stakeholders paid $4.70 apiece for the shares that they sold to institutional investors at $10, a regulatory filing today showed.

Net sales at STR fell 14 percent in the first half of the year, as its solar unit’s revenue slumped 26 percent. First-half net income plunged 61 percent to $6.24 million after the company spent 44 percent of its operating income on interest payments.

Focus on Valuation

The company is valued at about 33 times earnings over a full year based on its IPO price, data compiled by Bloomberg show. That compares with the median of 18.8 times estimated 2009 profits for 54 solar-related companies globally, according to data compiled by Bloomberg.

Demand for STR’s offering was also hurt after First Solar Inc., the largest U.S. maker of thin-film solar-power modules and a client of STR, reported results last month that disappointed investors, according to Matt Therian, an analyst at Renaissance Capital LLC in Greenwich, Connecticut. Shares of the Tempe, Arizona-based company plunged 17 percent as third-quarter sales missed analysts’ estimates and gross margins fell.

“Investors have gotten more and more focused on valuation, and bad trading in First Solar added pressure that a solar company doesn’t really need,” said Therian.

A total of 18 U.S. companies sold shares in IPOs in September and October, more than at any time in almost two years, data compiled by Bloomberg show. STR’s listing followed offerings this week from Hyatt Hotels Corp. of Chicago and Provo, Utah-based Ancestry.com Inc.

Pulled IPOs

The revival hasn’t coincided with bigger returns. The offerings in September and October outperformed the S&P 500 by 0.3 percentage point on average in the first month of trading, the worst performance in Bloomberg data going back 14 years.

IPOs by U.S. companies have beaten the S&P 500 by an average 21.3 percentage points since 1995.

Underwriters have been forced to pull three IPOs since Oct. 29, two of which were controlled by private-equity funds, after failing to drum up enough investor interest.

PlainsCapital Corp., a bank-holding company based in Dallas, postponed its IPO two days ago, citing “recent volatility in the financial markets.” The company planned to raise $240 million in its offering.

Aviv REIT Inc., the Chicago-based real-estate investment trust that operates nursing homes in 21 U.S. states, shelved its IPO on Nov. 3. The postponement came just five days after bankers were forced to pull an $800 million offering by George Town, Cayman Islands-based AEI after they couldn’t find enough buyers for the former overseas unit of Enron Corp.

Goldman Sachs and Credit Suisse were also underwriters for AEI. STR trades under the ticker STRI.

To contact the reporter on this story: Michael Tsang in New York at mtsang1@bloomberg.net

Last Updated: November 6, 2009 18:52 EST