NEW YORK (TheStreet) -- Private equity firms are taking advantage of the comeback in the real estate market to take portfolio companies in sectors such as homebuilding and construction supplies public.
According to data from the U.S. Census Bureau, sales of new single-family homes in April were at 454,000, up 2.3% from the previous month and up 29% from April 2012.
Also, as of June, McGraw-Hill Construction forecasts that U.S. single-family housing starts will increase to 1.1 million by 2015.
Besides the upward trend in home sales, another factor encouraging housing sector companies to go public is the stability in the initial public offering market. "People see that the market has been on an upswing and they want to take advantage of that," a source who advises on IPOs said.So far this year, 102 IPOs have been filed in the U.S., up 39.7% from the same period in 2012, according to data from Renaissance Capital. Also, 79 IPOs have priced, up 14.5% from the same period in 2012. The cyclicality of the real estate market also forces sellers to act quickly. "Everybody is aware that the residential and nonresidential construction markets are cyclical. They are in an upswing now and the [PE backers] want to get their deals to market before the market turns again," the source added. In hopes of taking advantage of the open IPO window, on June 14 alone two private equity-backed companies related to the real estate industry announced intentions to go public. Gores Group-backed Stock Building Supply Holdings, which provides building materials and construction services to homebuilders and contractors, filed for a $175 million initial public offering, with Goldman Sachs, Barclays and Citigroup as joint bookrunners on the deal. Gores acquired a 51% stake in Raleigh, N.C.-based Stock in May 2009 and then acquired the remainder of the company in November 2011 for an undisclosed amount. Also, homebuilder New Home filed for a $172.5 million IPO. The Aliso Viejo, Calif.-based company is backed by Toronto-based and real estate-focused private equity firm Tricon Capital Group, which invested $10 million in New Home in January 2011. Meanwhile, HD Supply Holdings, which is backed by Bain Capital, Clayton, Dubilier & Rice and Carlyle Group, is expected to go public on June 26. The company plans to sell 53.19 million shares in its initial public offering at between $22 and $25, the company said June 13 in a prospectus. At the midpoint of $23.50, the company could raise as much as $1.25 billion.
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