Realogy Riding High as Today's IPO Raises $1 Billion in New Cash

Seeking to reduce its debt to about $4.5 billion, Realogy Holdings Corp. (NYSE: RLGY) announced it has raised $1.08 billion in an initial public offering. The Parsippany, NJ-based company sold 40 million share at $27 each. The shares will be listed on the New York Stock Exchange under the RLGY symbol.

The company had offered the shares initially in the $23 to $27 range. Realogy owns Coldwell Banker and Century 21, major players in the U.S. residential real estate brokerage industry. Realogy is controlled by New York City-based Apollo Global Management LLC (NYSE: APO), headed by Leon Black.

Bloomberg reports Apollo, which was set to maintain a 50.2 percent stake in Realogy after the IPO, sought to take the company public almost six years after buying it as U.S. home prices headed for their worst collapse since the 1930s.

Based on filings at the Securities and Exchange Commission, at the midpoint of the IPO price range, Apollo's stake would be valued at $1.63 billion. New York City-based Paulson & Co., the hedge fund run by former Treasury Secretary John Paulson, was set to own a 10 percent stake in the company following the IPO. Realogy's ownership stake would be about 31 percent.

The Realogy IPO arrived at the same time that Apollo prepares to raise a new fund of $10 billion to $12 billion, according to informed sources.

Berry Plastics Group Inc. (NYSE: BERY), also owned by Apollo, completed an IPO last week, pricing the shares at the low end of the marketed range.  Apollo-owned companies CKE Inc. (CK) and Momentive Performance Materials Holdings LLC shelved offerings this year.

Apollo invested $1.05 billion in Realogy in the buyout, which was valued at $6.8 billion and completed in 2007, according to data compiled by Bloomberg. The firm announced the acquisition in December 2006, five months after home prices peaked, according to the S&P/Case-Shiller index.

Bloomberg reports that after the IPO and related transactions that convert debt to equity, the midpoint price would give Realogy net debt of $4.5 billion as of June 30. It would have an enterprise value of $7.77 billion, or about 16 times earnings before interest, taxes, depreciation and amortization of $500 million in the 12 months through June 30.

Goldman Sachs Group Inc. and JPMorgan Chase & Co. were hired to manage Realogy's IPO.