Nov. 8 (Bloomberg) -- JGWPT Holdings Inc., the firm that offers cash for settlements under the J.G. Wentworth brand, fell in its debut after pricing a decreased number of shares below a reduced range in its U.S. initial public offering.
The company raised $136.5 million, selling 9.75 million Class A shares for $14 each, according to a company statement today. JGWPT lowered the price range to $15 to $16 apiece before the offering, from $19 to $22 initially, and cut the number of shares from 12.2 million. The stock declined 8.4 percent to $12.82 at 4 p.m. in New York. JGWPT is listed on the New York Stock Exchange under the symbol JGW.
Through its J.G. Wentworth and Peachtree brands, JGWPT purchases future payments owed to customers for settlements from events such as personal injury claims and lottery winnings in exchange for cash. The Radnor, Pennsylvania-based company securitizes the settlements and sells them to investors. During the financial crisis, the company was unable to find buyers for its asset-backed securities, which caused it to miss an interest payment and file for Chapter 11 bankruptcy protection in 2009.
Since 1995, the company has invested about $585 million in marketing, the company said in its prospectus. It’s known for the TV commercial with the tag line, “It’s my money and I need it now.”
JGWPT’s revenue increased 85 percent to $467 million last year, due to the merger with Peachtree and a lower interest rate environment, the prospectus shows. The company reported net income of $116.7 million last year, compared with a loss of $3.9 million in 2011. Barclays Plc and Credit Suisse Group AG managed the offering.
Majority owner JLL Partners Inc. emerged from the IPO with more than a 300 percent paper gain, according to a person familiar with the matter, who asked not to be named because the information is private.
The New York-based private-equity firm invested $110 million in JG Wentworth’s 2009 bankruptcy reorganization. That outlay included $37 million of bridge funding that JG Wentworth repaid within a year, the person said.
Earlier this year, JLL extracted about $255 million in a debt-financed dividend from the company. The firm bought about $20 million in newly issued Class A shares in conjunction with the IPO, raising its net investment in JWGPT to about $93 million, the person said.
Including those shares, JLL holds 10.85 million Class A and Class B shares, for a market value of about $139.1 million based on today’s closing price. It has a 38.6 percent economic stake and 63.4 percent voting control, according to the IPO prospectus.
JLL has owned JG Wentworth twice. In 2005, it paid $125 million for a majority stake and awarded itself about $290 million in debt-financed dividends before the company filed for Chapter 11, the person said. The bankruptcy wiped out JLL’s original equity stake.
Bill Miles, JLL’s head of investor relations, declined to comment on the IPO or JLL’s investment.
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