Gardner Denver off to a good start with +4% open
Based in Milwaukee, Wisconsin Gardner Denver is a globally recognized producer of flow control and compression equipment. The company was founded in 1859 and currently operates in 175 countries.
Gardner Denver (NYSE: GDI) makes equipment that is utilized across many industries. Most of its compressors are used for commercial purposes in the industrial sector while others are employed in the energy production industry. Other Gardner Denver equipment is used in food and beverage packaging while others are applied in lab scientific investigations as well as in chemical processing.
What makes Gardner Denver the leading supplier of this equipment in the US is the quality of service that the firm provides. The firm sells production equipment, but so do many other companies. Gardner Denver also offers its consumers accompanying services. These services include everything from shipping services to maintaining damaged equipment. The wide range of commercial and industrial grade equipment, the company’s good reputation and the strong relationship with its customers is what puts Gardner Denver way ahead of its competitors.
If you’re an investor, then you had probably waited eagerly for the Gardner Denver IPO. Who wouldn’t, given that most analysts had estimated that the issuance would be worth up to $1 billion? Gardner Denver priced 41.3 million of its common shares at $20 apiece. The figure was below the approximated $23 to $26 price range, which was surprising, given the IPO’s potential.
When the market opened on Friday, Gardner Denver shares began trading at $20.78, above the proposed price. The price changed during the day, hitting $21.10 at one point. By the end of the day, Gardner Denver had sold off all of its shares raising an estimated $826 million. The company still has 6.195 million shares in over-allotment, but so far the proceedings from the IPO are at +5.5%. Goldman Sachs, Credit Suisse, Deutsche Bank, Simmons &Co., William Blair, Baird, HSBC Corp, Stifel, KKR, UBS Investment Bank, Citi and Morgan Stanley were among the underwriters for the deal.
Gardner Denver’s future projections are the reason behind the company’s strong performance on the market on Friday. There are still concerns about the firm’s financial future because in 2016 Gardner Denver posted reduced revenues and profits if you compared them to those of 2015. The company also reported having made substantial losses in the twelve months that ended December 31st, 2016 although the 2016 losses were significantly less than those of 2015. On the bright side, Gardner Denver’s P/S was still higher than those of its competitors even before the IPO. Better yet, they can only improve with the incoming proceeds.
KKR Inc. remains the majority shareholder in Gardner Denver after the issuance. Gardner Denver CEO Vicente Reynal stated that the company would use the IPO proceeds to “repay its debt and fulfill some of its financial obligations to KKR”. Reynal also said that he thought Gardner Denver had outperformed its pricing because it was had good financials pre-IPO. “We also have the the company’s innovation and teamwork to thank for that,” Reynal added.
As if to prove Reynal’s point, Gardner Denver announced on Friday that it would be issuing 6,000 of its employees with stock amounting to $100 million. If you worked at Gardner Denver, that means you would get a 40% raise on your annual base salary in 2017.