HD Supply Holdings Inc., the construction-supply business owned by private-equity firms including Carlyle Group LP, filed for a $1 billion U.S. initial public offering.
The offering size is a placeholder amount that may change. Proceeds from the IPO will go toward repaying debt, the Atlanta-based company said in a regulatory filing today. The company, led by Chief Executive Officer Joseph J. DeAngelo, had $8.93 billion in total liabilities as of Feb. 3.
HD Supply generated $8 billion in sales in the year ended Feb. 3 operating in more than 600 locations in the U.S. and Canada. Home Depot Inc., the world’s biggest home-improvement chain, sold HD Supply in 2007 to a group including Carlyle, Bain Capital LLC and Clayton, Dubilier & Rice LLC for $8.5 billion.
Home Depot had reduced the price at the time of the sale after the U.S. credit squeeze shrank demand for leveraged buyout debt. The three buyout firms each own about 28 percent of HD Supply, the filing shows.
The offer coincides with the rebounding housing market and rising demand by contractors. In Home Depot’s fourth quarter ended Feb. 3, sales to professionals grew as quickly as sales to consumers after lagging behind during the housing downturn, Chief Executive Officer Frank Blake told analysts in February.
Blake sold HD Supply, reversing former CEO Robert Nardelli’s expansion of the unit, to focus on boosting profit at Home Depot’s stores. Net income at Home Depot has advanced annually since 2009, pushing shares higher in each of those four years and up 16 percent this year through yesterday.
HD Supply is following a February IPO by Boise Cascade Co., a U.S. producer of wood products used in home construction. Its shares surged 49 percent from Feb. 5 through yesterday after the stock sale raised $284 million including an overallotment.
“Perhaps the success of the Boise IPO helped drive their confidence to do this,” David Strasser, an analyst at Janney Montgomery Scott in New York, said today in an e-mail. He rates Home Depot neutral, the equivalent of a hold rating.
Builders began work on more houses in February and permits for future construction climbed to the highest level in almost five years. Housing starts climbed by 0.8 percent in February to a 917,000 annualized pace, the Commerce Department reported last month in Washington. Permits rose 4.6 percent to a 946,000 rate, the most since June 2008.
Companies in industries from homebuilding to retail are fueling a pickup in U.S. IPOs this year, taking advantage of rising investor appetite as U.S. stocks surge to record highs. U.S. initial offerings have raised $10.3 billion so far in 2013, 35 percent more than in the year-earlier period, according to data compiled by Bloomberg.
HD Supply joins other companies bought in large leveraged buyouts that are now selling shares to the public. Bausch & Lomb Holdings Inc., the eye-care company that Warburg Pincus LLC took private in a $4.6 billion transaction in 2007, filed for an IPO last month, regulatory filings show. Realogy Holdings Corp., which Apollo Global Management LLC bought the same year for $6.8 billion in the biggest leveraged buyout of a real-estate firm, raised $1.24 billion in an October IPO including an overallotment option, data compiled by Bloomberg show.
Home Depot, based in Atlanta, rose 2.4 percent to $73.62 at the close in New York.
Bank of America Corp., Barclays Plc, JPMorgan Chase & Co. and Credit Suisse Group AG are among the banks managing the share sale. The company didn’t specify which ticker it would use or which exchange it would list on.