Niska Gas Storage Partners LLC declined after raising $359 million in the first U.S. initial public offering since equity markets tumbled last week.
The natural-gas storage operator controlled by private-equity firms Carlyle Group and Riverstone Holdings LLC fell 6.8 percent to $19.10 in New York Stock Exchange trading. Niska priced 17.5 million units at $20.50 each yesterday, versus a range of $20 to $22, a statement and a filing with the Securities and Exchange Commission showed.
The initial sale was the first in the U.S. since companies from Ryerson Holding Corp. of Chicago to Santa Ana, California-based Smile Brands Group Inc. postponed IPOs on May 6 as the Dow Jones Industrial Average posted its biggest intraday drop since the crash of 1987. U.S. stocks have rebounded this week after European policy makers announced an almost $1 trillion loan package to aid the region’s most indebted nations.
“The IPO environment has become incrementally better as investor moods have improved,” said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $55 billion. “But they’re still in general viewed with a degree of caution.”
European Debt Crisis
At least 12 companies around the world postponed or withdrew IPOs in May as equities fell the most since 2008 last week. Waves of computerized trading exacerbated a selloff sparked by Europe’s debt crisis, pushing a gauge of U.S. stock volatility to the biggest increase in its two-decade history.
The Standard & Poor’s 500 Index then rebounded by the most in more than a year on May 10. That helped encourage nine companies to push ahead with initial offerings this week, making it the busiest period for deals this year.
At the original midpoint price, Niska would have been valued at 6.65 times its tangible book value. That was almost three times more than the median of 2.4 for 39 publicly traded U.S. competitors, data compiled by Bloomberg show.
Carlyle, the Washington-based buyout firm that oversees more than $88.6 billion, and Riverstone, the New York-based firm that manages $17 billion and specializes in energy and power investments, owned more than 95 percent of the holding company that controlled Niska before the IPO.
Goldman Sachs Group Inc. and Morgan Stanley of New York managed Houston-based Niska’s sale.
Niska’s deal is the first of five IPOs this week from companies backed by private-equity firms, Bloomberg data show.
Noranda Aluminum Holding Corp., the maker of rolled coils controlled by Leon Black’s Apollo Global Management LLC, and Express Inc., the specialty apparel retailer backed by Golden Gate Capital, may attempt sales today, Bloomberg data show.
Noranda of Franklin, Tennessee, is selling 16.67 million shares at $14 to $16 each, according to its SEC filing. Express, the Columbus, Ohio-based company that operates 573 outlets across the U.S. targeting consumers between 20 and 30 years old, is offering 16 million shares at $18 to $20 each.
“An IPO deal that’s private equity happening during a market environment like this -- it should be viewed as a positive,” said Marc Pado, the San Francisco-based U.S. market strategist at Cantor Fitzgerald LP.
Buyout firms have been forced to take some of the biggest discounts among 2010’s IPOs after distributions to clients last year decreased to the lowest since at least 2000, data from London-based Preqin Ltd. showed.
Blackstone Group LP in New York, the world’s largest private-equity firm, raised less than half of what it sought for York, Pennsylvania-based Graham Packaging Co. in February.
“The IPO market, of course, is streaky,” Blackstone Chairman Stephen Schwarzman said yesterday in Toronto. “Sometimes it’s there, sometimes when global markets become nervous, it gets diminished or goes away entirely. That’s a normal pattern for the IPO markets.”
While Niska completed its IPO yesterday, two Chinese companies postponed or reduced their offerings.
MIE Holdings Corp., the Beijing-based operator of oilfields in the Songliao basin, yesterday postponed its $96 million IPO after investors rejected its reduced offer of American depositary receipts at $7 to $8 apiece.
Kingtone Wirelessinfo Solution Holding Ltd., the software developer based in Xian in the province of Shaanxi, cut its U.S. initial sale by 26 percent to $24 million.