PE-Backed HD Supply and CDW Rise in IPO Debuts, But VC-Backed Tremor Video Tanks

(Reuters) – Shares of industrial supplies distributor HD Supply Holdings Inc (HDS.O) rose as much as 5.4 percent in their market debut on Thursday after they were priced well below the indicated range to attract increasingly skittish investors.

Four of the six companies that went public on Thursday were forced to either cut the price of their offering or reduce the number of shares.

HD Supply, a former division of Home Depot Inc, was valued at about $3.53 billion at its highest trading price of $19.25. The stock was at $18.64 at midday, up 3.5 percent.

The company is owned by Bain Capital, the Carlyle Group and Clayton Dubilier & Rice.

The IPO raised $957.2 million, far below the $1.33 billion that would have been raised if the shares had sold at the top end of the indicative range of $22 to $25.

Recent volatility in the equity markets has led several companies to cut the size of their IPOs or scrap them altogether.

Colony American Homes Inc, a provider of single family homes for rental, postponed its IPO earlier this month. Last week, Brazilian cement company Votorantim Cimentos postponed its $3.7 billion U.S. stock sale, citing market conditions.

Federal Reserve Chairman Ben Bernanke said last week that the Fed could wind back its stimulus policies this year if the economy continued to improve, suggesting the era of rock bottom interest rates was coming to an end.

Shares of technology products retailer CDW Corp (CDW.O), which also debuted on Thursday, rose about 9 percent in morning trading while advertising technology company Tremor Video Inc (TRMR.N) fell 5 percent.

Both companies priced below their expected offer range. CDW also reduced the number of shares offered.

Tremor’s fall in its market debut does not bode well for other similar companies such as Criteo, RocketFuel and YuMe which are looking to go public later this year.

Tremor priced its 7.5 million shares at $10 per share, below the expected range of $11 to $13. The stock ended the day at $8.50, a disappointing debut for Tremor’s VC backers, who invested more than $200 million in the company since 2006. Six venture firms own 68 percent of the company: Canaan Partners, Draper Fisher Jurvetson, General Catalyst Partners, Masthead Venture Partners Capital, Meritech Capital Partners and W Capital Partners

CDW, which sells products from Apple Inc, Hewlett-Packard Co and others through its catalog and website, raised about $396 million after its private equity owners, Madison Dearborn LLC and Providence Equity Partners Inc, withdrew plans to sell a total of 4.5 million shares.

The two had taken CDW private in 2007 for $7.3 billion.

CDW priced its shares at $17 on Wednesday, after lowering its expected range to $17 – $18 per share from $20 – $23 per share. It ended the day at $18.37.

Smaller companies making their market debut on Thursday were Silvercrest Asset Management, whose shares were up 10 percent at midday, and Aratana Therapeutics, whose stock was up 34 percent.

(Reporting for Reuters by Tanya Agrawal, Neha Dimri and Varun Aggarwal in Bangalore. Additional reporting for peHUB by Lawrence Aragon.)

Photo courtesy of ShutterStock