STEPHEN SINGER

Engineering services company Mistras Group Inc. is set to debut its shares Thursday, following an effort that was cut short last year by the sinking economy.

A problem that may affect it this time is that it could be eclipsed by two much larger initial public offerings set for Wednesday.

Mistras is a Princeton Junction, N.J., company that provides nondestructive testing and inspection services and software for analyzing, storing and monitoring inspection data. Customers include energy and industrial businesses and federal and state agencies.

In nondestructive testing, infrastructure is examined to identify defects and improve safety and operating performance without affecting the usefulness of the assets. NDT is seen as an alternative to many traditional inspection techniques that might otherwise require dismantling equipment or shutting down a plant.

Mistras says it will sell 8.7 million shares at between $14 and $16 each, raising between $121.8 million and $139.2 million.

Mistras estimates the net proceeds, which don't include the expenses of the offering, will be about $89.8 million, based on the initial offering price of $15, the midpoint of the share price.

It said it will use the proceeds for general corporate purposes, including working capital and possible acquisitions, and to repay debt.

Scott Sweet, managing partner of Lutz, Fla.-based IPOBoutique, said Mistras is likely going public because its emphasis on expanding its geographical reach and development and sales of new products may help increase revenue substantially. At the same time, it can take advantage of economies of scale in administrative and other costs, he said.

Mistras' IPO could be overshadowed by two much larger IPOs set for Wednesday, Sweet said. Banco Santander (Brasil) SA is set for $6.84 billion and Verisk Analytics Inc. of Jersey City, N.J., is set to raise $1.79 billion.

"Mistras at this point is taking a back seat to big deals coming tomorrow," Sweet said. "It may not get the same demand the deals tomorrow are likely to get."

The oil and gas sector accounted for 58 percent of Mistras' $209.1 million in revenue in fiscal 2009, the company said. With oil prices falling in the recession, Mistras said in a regulatory filing that its dependence on the industry is among its business risks.

"We continue to diversify our customer base into industries other than the oil and gas industry, but we may not be successful in doing so," the company said. "If the oil and gas industry were to suffer a prolonged or significant downturn, our operating performance may be significantly harmed."

In addition, Mistras provides nondestructive testing services for aerospace and defense, nuclear power, transportation, pharmaceuticals and food processing industries.

Its customers include American Electric Power Inc., Bayer AG, Bechtel Corp., General Electric Co., Boeing Co. and Valero Energy Corp. and various federal, state and local agencies.

Competitors are GE Inspection Technologies, a division of General Electric Co., and Team Inc., Sweet said. SGS SA, a private company, is another competitor, he said.

Francis Gaskins, editor of IPOdesktop, said Mistras will likely face strong competition from GE Inspection Technologies and Team Inc., which he said are substantially larger and can combine project work for customers who already purchase other types of products or services.

The company was founded by former AT&T Bell Laboratories researchers in 1978 and operated as Physical Acoustics Corp. until Dec. 29, 1994, when it reorganized and began operating as Mistras Holdings Corp. Its name was changed to Mistras Group in February 2007.

As of Aug. 1, it said it employed about 2,000 employees.

J.P. Morgan, Credit Suisse and BofA Merrill Lynch are managers and Robert W. Baird & Co. will be a co-manager.

Mistras Group will trade on the New York Stock Exchange using the ticker symbol MG.

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