FMSA Holdings Unchanged in Debut After Cutting IPO Size

FMSA Holdings Inc., a provider of sand-based products for hydraulic fracturing, was unchanged in its first day of trading after raising a smaller-than-expected amount in its initial public offering.

The stock closed at $16 in New York. Shareholders of the Chesterland, Ohio-based company, also known as Fairmount Santrol, sold 25 million shares at that price, according to a statement, after offering 44.5 million shares for $21 to $24.

Hydraulic fracturing, a technique that blasts water, sand and chemicals underground to unlock trapped hydrocarbons, has helped put the U.S. on a path to energy independence. Fracking is being used at more wells, boosting demand for sand to prop open cracks in rock to release oil and natural gas.

FMSA posted $629.2 million in revenue during the six months through June 30, a 40 percent jump from the same period a year ago, according to its IPO filing. Net income for the period was $78.5 million, 14 percent higher than the first six months of 2013. FMSA had 798.2 million tons of proven mineral reserves at the end of 2013.

The number of horizontal wells to be fracked in the U.S. and Canada will climb 14 percent next year and a further 11 percent in 2016, according to a Sept. 16 report from PacWest Consulting Partners, a Houston-based industry adviser. Demand for raw and ceramic sand is expected to climb 41 percent to 153.4 billion pounds in 2016, from 109 billion this year.

Prices for northern white composite sand, which comes from Wisconsin, Illinois and Minnesota, are expected to climb 5 percent a year through the same period, according to PacWest.

Morgan Stanley, Wells Fargo & Co. and Barclays Plc managed the offering. The shares are listed on the New York Stock Exchange under the symbol FMSA.

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