Exclusive: Private equity owners plan HD Supply IPO - sources
Private equity owners are preparing to take HD Supply public, nearly six years after buying the industrial distribution company out of Home Depot Inc for $8.5 billion, three people familiar with the matter said on Monday.
Bain Capital, Carlyle Group and Clayton, Dubilier & Rice, the buyout firms who jointly led the deal in 2007, plan to interview investment banks next week to select underwriters for the proposed initial public offering (IPO), the people said.
Representatives for Bain and CD&R declined to comment. Carlyle and HD Supply did not immediately respond to requests for comment.
HD Supply is one of the largest distributors of construction, industrial and maintenance supplies in North America and the IPO would be the latest attempt to capitalize on the rebound in the U.S. housing sector, which was hit hard by the turmoil in the U.S. credit market in late 2007.
Low interest rates and rising rents have pushed many consumers to buy homes, reviving the housing market.
Home Depot, which maintained a 12.5 percent stake in HD Supply as part of the buyout, declined to comment about the proposed IPO.
Home Depot divested HD Supply after building it up into a $12 billion company, but the deal coincided with the credit crisis, and the business suffered from the subsequent downturn in the housing market.
HD Supply's performance has improved significantly in recent years as residential and commercial construction rebounds from the trough of the financial crisis. It reported $7 billion in revenues and more than $500 million in adjusted earnings before interest, tax, depreciation and amortization (EBITDA) for the fiscal year ended January 2012.
For the nine months ended October 2012, sales rose 12.4 percent to $6 billion and adjusted EBITDA surged 30 percent to $529 million, from the same period the year before.
The housing market recovery has also encouraged other companies to hold IPOs.
TRI Pointe Homes Inc , the first homebuilder to go public in more than a decade, saw shares rise more than 17 percent on their first day of trading in January.
Plywood maker Boise Cascade Co , whose products are used in new residential construction and remodeling projects, priced shares at $21 in February. It raised its price range to $18 to $20 from an earlier range of $16 to $18.
Taylor Morrison, which builds single-family homes and planned communities, is also slated to go public in March, sources previously told Reuters. The company had originally filed for a $250 million IPO, which it later doubled in size.
(Reporting By Olivia Oran and Soyoung Kim; Editing by Miral Fahmy)