Realogy IPO Prices $1.08 Billion IPO at High End of Expected Range

   By Chris Dieterich 
 

NEW YORK--Realogy Holdings Corp. priced its initial public offering at the high end of its expected range Wednesday, a bright spot in a week that has so far seen newly public companies fetch lower prices than expected.

Realogy's IPO priced its 40 million shares at $27 each. Its expected range was $23 to $27. The deal, worth $1.08 billion, is among the largest of the year in the U.S.

Realogy, based in Parsippany, N.J., will begin trading on the New York Stock Exchange on Thursday under the symbol RLGY.

The company is the largest U.S. residential real-estate-services firm by revenue. It owns and franchises residential-real-estate brokerages including Century 21, Coldwell Banker, ERA and Better Homes and Gardens Real Estate. Brokers earn revenue from fees and commissions that are based on a percentage of the home prices when properties are sold.

Realogy's IPO is set to launch some five years after private-equity firm Apollo Global Management LLC (APO) bought the company around the time housing prices peaked. The highly leveraged, $8.5 billion deal left the company with a hefty debt load.

Realogy said it plans to use proceeds from the IPO to pay down debt. Realogy's long-term debt totaled $7.1 billion as of June 30, according to a Tuesday regulatory filing.

The housing market has shown signs of recovery in recent months, with sales picking up and home prices firming.

During the first eight months of 2012, Realogy's volume of completed home sales, or the average sale price multiplied by number of transactions, increased 13% from the same period a year earlier.

In its most recent quarter, Realogy booked net revenue of $1.3 billion, up 11% from the year earlier, though the decline in net earnings widened 9% to $24 million.

Apollo Funds owned 73% of Realogy ahead of the deal and will retain a roughly 50% stake afterward. Hedge-fund firm Paulson & Co. held a 15% stake that will fall to about 10% after the offering.

An Apollo-backed IPO is the largest deal of the week for the second week in a row. Berry Plastics Group Inc.'s (BERY) $470 million IPO fell in its debut last week and closed Wednesday down 12% from its offering price.

The recent track record for Apollo-backed IPOs has been checkered. In August, Momentive Performance Materials Holdings LLC withdrew its $862.5 million offering. Also that month, CKE Inc. (CK), operator of Carl's Jr. and Hardee's fast-food restaurants, postponed its $200 million IPO, citing unfavorable market conditions.

By and large, IPOs have failed to lock in their originally forecast offer prices in recent weeks. Two deals that hit markets Wednesday--Ambarella Inc. (AMBA) and Amira Nature Foods Ltd. (ANFI)--each priced below expectations.

Goldman Sachs Group Inc. (GS) and J.P. Morgan Chase & Co. (JPM) served as lead underwriters for the Realogy deal.

Write to Chris Dieterich at [e-mail]

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