Shares of SeaCube Container Leasing Ltd. rose sharply in their market debut Thursday, after pricing below expectations at $10 per share.
The Park Ridge, N.J., company, which leases shipping containers, previously said that it expected its initial public offering of 7.5 million shares to cost between $16 and $18 apiece. SeaCube expected to raise $135 million, a more conservative number than the $165 million the company predicted when it first filed for an IPO in March.
But balking institutional investors and a trampled shipping market likely compelled SeaCube to slash the price of its stock, said Scott Sweet, senior managing partner of IPO research firm IPO Boutique. The company had to lower the stock price and raise dividends to persuade investors to take a chance on a company whose success would require global trade to perk up.
"The economy has taken a mighty toll on cargo containers, and the whole dry bulk shipping area is basically dead right now", he said.
During the first six months of the year, SeaCube's revenue fell to $68.6 million from $75.6 million, according to the company's prospectus.
Sweet added that while this was not an ideal time for SeaCube to make an initial public offering, it was a fast way for the company to generate cash.
The IPO includes 2.5 million shares of primary common stock, along with 7 million shares of secondary common stock from an initial shareholder, Seacastle Operating Company, Ltd., which will own 58 percent of the company after the IPO closes on Nov. 2.
Sweet said that by selling 2 million more shares than expected, SeaCube is likely to recoup some of the revenue it will lose by lowering the price of its shares.
Underwriters have a 30-day option to buy up to 950,000 additional shares; they can also purchase up to 475,000 additional shares to cover any excess demand. JPMorgan, Citigroup and Deutsche Bank Securities are the lead underwriters of the offering.
In afternoon trading, the stock jumped 97 cents, or 9.7 percent, to $10.97.
SeaCube's stock trades on the New York Stock Exchange under the ticker symbol "BOX."