Stock Building Supply shares rose 3 percent on Friday as the Raleigh company became the seventh Triangle company to complete an initial public offering of stock this year.
Stock raised $98 million after selling 7 million shares at $14 per share. But the company was forced to reduce the size and price of the IPO to get the deal done. It had previously targeted selling 8.82 million shares at between $16 and $18.
The move is another sign of how enthusiasm for housing-related stocks has cooled, said John Fitzgibbon Jr., who tracks new stock offerings for IPOScoop.com.
“The last several housing stocks that have gone public are basically all under water,” he said. “They had good opening day squirts but they’ve come down to earth.”
Stock sells windows, doors, roofing and other housing materials. As home prices have risen and new construction has ramped up, a number of homebuilders and companies that provide materials to the industry have sought to raise money in the public markets.
While the IPOs of companies that sell materials have fared better than builder stocks over the past year, Fitzgibbon said the investors’ appetite for the sector is not as strong as it was just a few months ago.
“Obviously [Stock] had to cut the price, cut back the number of shares to get the deal out the door to sell at a small premium,” he said. Stock shares closed Friday at $14.43.
Stock itself didn’t reduce the number of shares it sold. The company’s owner, the Los Angeles-based private equity firm The Gores Group, reduced the stake it sold from 4.4 million shares to 2.59 million shares. The underwriters also have the option to purchase an additional 1.05 million shares at the IPO price.
Stock’s proceeds from the IPO are expected to be $57.4 million, below the $67.5 million the company had initially expected to earn after deducting fees and expenses. Stock plans to use $46.2 million of the proceeds to pay down debt. The company, which employs more than 2,400 people, had about $100 million in debt at the end of March.
The 7 million shares Stock sold amount to about 27 percent of its total outstanding shares. At $14 each, that puts the company’s market capitalization – the total value of its outstanding shares – at $358.1 million.
Stock is the second housing-related company based in the Triangle to go public this year. Ply Gem Holdings, a Cary company that produces vinyl siding and other products for home exteriors, raised $306.5 million in May. After being offered at $21, Ply Gem shares closed Friday at $18.51.
The five other local companies that completed IPOs this year are:
• LipoScience, a Raleigh medical diagnostics company, raised $44.4 million in January. After being offered at $9, the company’s shares closed Friday at $5.24.
• Chimerix, a Durham antiviral drug developer, raised $117.9 million in April. After being offered at $14, the company’s shares closed Friday at $18.05.
• Quintiles, a pharmaceutical services company based in Durham, raised nearly $950 million in May. After being offered at $40, the company’s shares closed Friday at $45.64.
• ChannelAdvisor, a Morrisville e-commerce company, raised about $80 million in May. After being offered at $14, the company’s shares closed Friday at $25.
• Heat Biologics, a small Chapel Hill startup developing cancer treatments, raised $25 million in July. After being offered at $10, the company’s shares closed at $9.81 Friday.