Colfax shares surge nearly 20 percent in debut after IPO
NEW YORK—Shares of pump and valve manufacturer Colfax Corp. surged nearly 20 percent in their debut on Thursday after the company's initial public offering priced at $18 per share, above the expected price range.
In afternoon trading, Colfax shares jumped $3.44, or 19.1 percent, to $21.44. After opening at $22.50, the stock has traded between $20.50 and $24 during the session.
Colfax makes fluid-handling products, including pumps and specialty valves. The company has plants in Europe, North America and Asia and serves five core markets: commercial marine, oil and gas, power generation, global navy and general industrial.
In 2007, Colfax reported income of $64.9 million, while its revenue rose 29 percent to $506.3 million.
"Colfax's end markets are bubbling with growth," analysts with Renaissance Capital's IPOhome.com said in a research note. The company is benefiting from surging crude oil prices, increasing investment by emerging economies in their energy infrastructures and construction of next generation navy vessels, the analysts said.
Scott Sweet, managing director of research firm IPO Boutique, noted that Colfax's competitors, Flowserve Corp. and Robbins & Myers Inc., are now trading at or near 52-week highs. The stocks of both companies have roughly doubled in price since last May.
On the risk side, analysts note that Colfax is contending with asbestos-related personal injury lawsuits.
The Richmond, Va.-based company sold about 9 million of the shares, while shareholders offered the remaining 9.7 million shares. The selling stockholders, directors Mitchell P. Rales and Steven M. Rales, were expected to own a combined total of 44 percent of the company's stock after the IPO.
Assuming the underwriters exercise all their overallotment options, total proceeds from the offering would be about $388 million. Of the total, Colfax is expected to raise about $213.3 million before fees and expenses.
Colfax plans to use its proceeds from the IPO to repay debt, and the rest to reimburse the selling stockholders for an underwriting discount and to pay executive bonuses and preferred dividends.
Merrill Lynch, Lehman Brothers and UBS Investment Bank were the IPO's lead underwriters. Robert W. Baird & Co., Banc of America Securities LLC, Deutsche Bank Securities and KeyBanc Capital Markets also served as underwriters.
The underwriters have the option to buy up to 2.8 million additional shares from Colfax to cover any overallotments.
Colfax shares trade on the New York Stock Exchange under the symbol "CFX."
