LITTLE ROCK — Shares of Norwegian Cruise Line Holdings Ltd. jumped as much as 34 percent after the company raised $447 million in an initial public offering, pricing the shares above their expected range.
The stock closed Friday at $24.79 in New York after its market debut. Miami-based Norwegian sold 23.5 million shares, a 12 percent stake, for $19 each, according to a statement Thursday, after initially planning to offer them for $16 to $18 apiece.
Norwegian is taking advantage of a pickup in demand for cruises and plans to use proceeds from the IPO to repay debt. Buyers in the offering valued Norwegian as expensively as its largest competitor, Carnival Corp., which controls five times Norwegian’s share of the cruise business, according to Morningstar Inc.
The industry has persevered through tough times and “grown at a significantly higher pace with new capacity coming on,” Chief Executive Officer Kevin Sheehan said.
“Every time you bring out one of these beautiful new ships, it gets new people to take notice,” he said Friday in a telephone interview.
Norwegian operates 11 ships and plans to expand with several more over the next few years, according to the company’s filings.
Norwegian planned to use the IPO to reduce total debt to $2.6 billion, according to regulatory filings.
At the IPO price, Norwegian had an enterprise value of $6.4 billion, or about 12 times earnings before interest, taxes, depreciation and amortization in the 12 months through September, according to data compiled by Bloomberg. That’s in line with Carnival Corp., which also traded at 12 times as of Thursday.
Carnival, also based in Miami, has a market share of about 50 percent, while Norwegian’s share is between 7 percent and 10 percent, according to Jaime Katz, a Chicago-based analyst at Morningstar.
“They’re a smaller player and obviously not a price setter in the business, so they’re at the mercy of Royal and Carnival’s pricing strategy,” Katz said. Also, with less capacity than Carnival, and fewer itineraries, it has less flexibility to respond to changing market conditions or route popularity in an industry that is vulnerable to economic cycles and consumer sentiment, she said.
New York-based Apollo Global Management LLC and Fort Worth-based TPG Capital together paid $1 billion for half of Norwegian’s equity in January 2008, data compiled by Bloomberg show.
Apollo will own about 33 percent of Norwegian after the IPO, and TPG will own about 11 percent, filings show. Genting Hong Kong Ltd., which owned the cruise line before the private equity firms’ investment, will hold44 percent.
The shares are listed on the Nasdaq Stock Market under the symbol NCLH. UBS AG and Barclays Plc led the offering.
Business, Pages 29 on 01/19/2013