Boise Cascade builds big gains on IPO
Bank to pay $612M fine over manipulated interest ratesbets on housing recovery lift firm in its stock debut
LOS ANGELES — Riding a U.S. housing recovery and a booming stock market, Boise Cascade, a maker of plywood and other building materials, jumped 25 percent in its market debut Wednesday.
It's the latest solid first-day gain for an IPO, boding well for other companies that want to raise money by going public. Cruise company Norwegian Cruise Line rose 30 percent in its Jan. 18 debut, and has kept rising. Child care provider Bright Horizons gained 27 percent on Jan. 25. Homebuilder Tri Pointe added 12 percent on Jan. 31.
"It's a very healthy IPO market," said Francis Gaskins, president of researcher IPOdesktop. "The lake is rising in terms of the stock market and that brings in IPOs, and in that context, IPOs generally do quite well."
The Dow Jones industrial average, a stock market bellwether, had closed above 14,000 on Friday for the first time since the financial crisis began.
Investors may have been particularly drawn to Boise Cascade as a way to bet on the housing recovery. Home sales and prices have routinely been setting multiyear highs as they come back from the real estate collapse, fueled by improvements in the job market and the overall economy, coupled with low interest rates.
Shares in the 13 biggest publicly traded U.S. builders remain well off their peak prices from 2005, during the housing boom. Still, their stocks, on average, more than doubled in 2012.
That supports demand for real estate-related IPOs, Gaskins said.
And more is likely coming. Another homebuilder, Taylor Morrison Home Corp., filed documents for an initial public offering in December. The Scottsdale, Ariz., company hopes to raise up to $250 million.
Boise Cascade isn't a homebuilder itself. Originally formed in 1913, Boise Cascade makes plywood and other wood products and building materials, supplying about 4,500 wholesalers, home improvement centers, retail lumberyards and other customers. It bought office supply chain OfficeMax in 2003. That company then sold its paper and wood products division to Madison Dearborn Partners LLC. The private equity firm took Boise Cascade to market and still owns about 70 percent of the Boise company after the IPO. Office supply chain OfficeMax Inc. also kept a 20 percent stake.
Boise Cascade raised $247.1 million in its IPO, which was more than it expected, from selling 11.8 million shares for $21 each. It had initially set a price range of $16 to $18, and raised that to $18 to $20 on Tuesday in a signal of healthy demand. Boise Cascade plans to use $25 million to repay debt and the rest for general corporate purposes.
Trading under the "BCC" ticker symbol on the New York Stock Exchange, Boise Cascade's stock gained $5.15 to close at $26.15.
Boise Cascade has a distribution yard and warehouse in Salt Lake City.
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