Private equity firms have been eager to sell companies to public investors this year, with the stock market on a tear. But on Friday, one company sold by the Carlyle Group had a rocky start.
The CommScope Holding Company, which makes telecommunications equipment, fell as much as 1.9 percent in its trading debut on Friday. The stock opened at $15.14, only 14 cents above its initial public offering price that was set Thursday evening.
The stock recovered after its initial decline, trading at around $15 a share. It is listed on the Nasdaq under the ticker symbol “COMM.â€
On Thursday, the company priced its shares below its expected range of $18 to $21, reflecting muted demand. The deal raised $577 million, valuing the company at $2.8 billion.
With stocks buoyant this year, private equity firms have been bringing some of their portfolio companies to market, in the hope of realizing gains on their investments. While some offerings have had warm receptions on Wall Street, others have had a more mixed experience, especially amid concerns that the Federal Reserve would pull back on its economic stimulus.
This summer, for example, HD Supply, an industrial distribution company owned by Carlyle, Bain Capital and Clayton Dubilier & Rice priced its shares below its expected range. And the CDW Corporation, a technology products retailer backed by Madison Dearborn and Providence Equity Partners, priced its stock at the low end of a reduced range.
Founded in 1976, CommScope makes equipment for wireless operators to bolster their networks, in addition to connectivity products for companies’ data centers. Its success depends on consumers’ continuing hunger for mobile data.
The company, based in Hickory, N.C., agreed to a $3 billion buyout by Carlyle in 2010, after a year in which its sales flagged.
Sales have picked up under Carlyle’s ownership, growing 11 percent to $1.7 billion in the six months that ended June 30. The company reported net income of $17 million for that period, compared with a loss of $11.4 million a year earlier.
CommScope said its adjusted debt was $2.5 billion as of June 30.
Carlyle sold 7.7 million shares in the offering, while the company sold 30.8 million shares. The lead underwriters on the deal were JPMorgan Chase, Deutsche Bank Securities and Bank of America Merrill Lynch.
