Delphi Automotive Plc Chief Executive Officer Rodney O’Neal said the management of the former parts unit of General Motors Co. (GM) led the push for yesterday’s public stock offering, taking advantage of a “narrow window.”
Delphi fell 3.1 percent in its trading debut yesterday after raising $530 million in an initial public offering that priced the stock at the low end of a range. Today, Delphi fell 1.5 percent to $21 at the close in New York.
The Troy, Michigan-based company, which emerged from bankruptcy in 2009, sold 24 million shares for $22 each after offering them for $22 to $24 apiece. Most of the proceeds went to the largest shareholder, Paulson & Co., led by John Paulson, the billionaire hedge-fund manager having the worst year of his career.
“We’d been a public company in the past and the management team really wanted to get back to where we were,” O’Neal said in an interview. “This was a management-led initiative. Being public actually creates more value, even though the global markets are a little bit choppy right now. We had a narrow window and we took advantage of it and so glad we did.”
Delphi proceeded with the IPO amid turbulence in global markets and the automobile industry, which led billionaire Wilbur Ross to delay the offering of his International Automotive Components Group until at least January.
IPOs totaling $8.9 billion were canceled or postponed in the third quarter. Consumer-review site operator Angie’s List Inc. also sold shares in an IPO Nov. 16, raising $114 million after pricing at the high end of a proposed range.
“There was a lot of sector noise and continued noise coming out of Europe,” O’Neal said. Being able to price within the $22 to $24 IPO range was “an outstanding success story,” he said.
Delphi returned to profitability last year after cutting costs and focusing on selling fuel-injection systems and other car parts in faster-growing countries such as China. Asia represented about 16 percent of Delphi’s $13.8 billion in sales last year. That may rise to 30 percent of sales within three to five years, O’Neal said.
The CEO also said today he would consider acquisitions to boost Delphi’s powertrain and electronics units, which make fuel injectors and vehicle navigation and infotainment systems. Such deals would be “nothing transformational” and probably less than $1 billion each, he said.
Delphi has benefited from the recovery in the U.S. auto industry, highlighted by last year’s IPOs of GM and Tesla Motors Inc. (TSLA), the first U.S. automakers to go public in more than 50 years. Market turmoil has driven down shares of GM 41 percent and Ford Motor Co. (F) 40 percent this year.
The hedge fund led byPaulson intended to sell more than 80 percent of the shares in the IPO, according to Delphi’s prospectus, and other existing shareholders offered the rest. The company isn’t getting any proceeds from the IPO, led by Goldman Sachs Group Inc. (GS) and JPMorgan Chase & Co. (JPM)
Delphi is registered in Gillingham, U.K.
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