Shares of AGA Medical Holdings Inc., the first Minnesota initial public offering in nearly two years, climbed 10 cents Wednesday to close at $14.60 a share in their first day of trading.
AGA, in a tenuous market and amid some uncertainty about products still in development, sold 13.75 million shares through its underwriters Tuesday night, but the share price of $14.50 was well below the $19 to $21 that the Plymouth company had expected earlier this month.
The company, whose largest shareholder is private equity firm Welsh, Carson, Anderson & Stowe, raised $199.4 million. It and a major selling shareholder had hoped to raise around $275 million.
Despite the soft IPO price, AGA's share price held up during the day thanks to wide profit margins and the potential for its pipeline of products that have a serious opportunity as low-cost alternatives.
"The market opportunity for their pipeline products is about $6 billion and they are highly profitable," Matt Therian, an analyst with Connecticut investment firm Renaissance Capital, told Reuters.
Investors also may have balked after AGA's co-founder and former CEO Frank Gougeon increased the number of shares he was selling by about 2 million on Tuesday, while AGA itself sold fewer shares, leaving it with less money with which to pay down debt.
At the share price of $15.50 that AGA had pegged as its high estimate earlier this week, the company would have realized $96 million from the offering, less than the net of $154.2 million it had originally estimated.
Welsh Carson, which owns 52 percent of the company, did not sell any shares into the offering.
