NEW YORK (Reuters) – Emdeon Inc (EM.N) rose 6.6 percent in its trading debut on Wednesday while Starwood Property Trust Inc (STWD.N) recovered in the last minutes of trading to end that day flat after their respective initial public offerings.
Emdeon shares closed their first day of trading on the New York Stock Exchange at $16.52 after rising as high as $18.24 earlier in the day. Emdeon, a health information technology provider, sold 23.7 million shares at $15.50 each to raise about $367 million in its IPO on Tuesday.
Starwood Property, a real estate investment vehicle that also listed on the Big Board, finished the day trading at $20, the same as the price set in its $810 million IPO, which will become the largest of the year in the United States if underwriters exercise their rights to buy additional shares.
Both companies increased the size of their IPOs on Tuesday prior to their pricing to meet investor demand.
Nashville, Tennessee-based Emdeon provides software that links U.S. healthcare providers such as hospitals, pharmacies and doctors with private and public insurers. Last year, it processed almost half of the electronic payment claims made in the United States.
Emdeon stands to gain from whatever reforms emerge from the Obama administration’s health care reform, its chief executive said.
“No one knows how that reform will shake out, but there are consistent themes, such as more and better information exchange, that are all things that will benefit our company,” Emdeon Chief Executive George Lazenby told Reuters in an interview.
Emdeon had revenue of $444.4 million in the six months ended June 30, up 5 percent from the year-earlier period.
Despite that tepid growth, Emdeon likely benefited from strong investor interest in the sector that has also buoyed the stocks of chief rivals such as Eclipsys Corp (ECLP.O) and Cerner Corp (CERN.O), which have risen by 21.6 percent and 68.2 percent respectively this year, an analyst said.
“They are dominant in their market. Investors are taking a look at this sector, so it makes sense that the leader would command a premium,” said Francis Gaskins, president of advisory firm IPO Desktop.
Emdeon becomes the 15th out of 17 IPOs this year, excluding those by real estate investment trusts, to get a “first-day pop.”
Starwood Property, which was created in May, intends to invest the proceeds in commercial mortgage-backed securities sold under the U.S. government’s public-private investment program, or PPIP.
In its prospectus, Starwood Property said “there will be a significant supply of distressed investment opportunities from sellers” over the next five years.
Starwood Capital Group, controlled by Barry Sternlicht, has previously formed companies such as Starwood Hotels & Resorts Worldwide (HOT.N) and property finance company iStar Financial Inc (SFI.N). (Editing by Steve Orlofsky)