Delphi Automotive raised $530 million last Wednesday in its initial public offering, with its shares priced lower than its anticipated range. Bloomberg stated that Delphi Automotive, a former parts unit of General Motors Co., was able to sell 24 million shares for $22 each after they were offered for $22 to $24 each.
This Thursday, Delphi will start trading on the New York Stock Exchange under the symbol DLPH. With this price range, Delphi is valued at a discount compared to other auto parts makers in North America since majority of the proceeds went to Paulson & Co., the largest shareholder.
Delphi had initially cited a $1 billion IPO, with plans for these funds to be used in debt payments and working capital. The hedge fund led by billionaire John Paulson meant to sell over 80% of the shares in the IPO, as stated in Delphi's prospectus.
The rest were offered by other existing shareholders. Delphi is not receiving any proceeds from the IPO. In the 12 months through September, Delphi has an enterprise value of around $8.5 billion, or 4.4 times earnings before interest, taxes, depreciation and amortization, at the IPO price.
In comparison, rival Visteon Corp. has it at around 5.4 times while North American auto-parts makers have it at an 5.8 times, according to data compiled by Bloomberg Industries.
Delphi had emerged from bankruptcy in 2009. It is headed by CEO Rodney O'Neal. It became profitable once again last year after it was able to reduce costs and concentrate on selling fuel- injection systems and other car parts in countries experiencing faster growth, one of which is China. [source: WashingtonPost]