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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowShares of KAR Auction Services Inc. on Friday morning traded below prices set by the vehicle auctioneer in its initial
public offering.
KAR raised $300 million Thursday selling 25 million shares for $12
apiece. But shares traded at $11.93 in late-morning trading Friday on the New York Stock Exchange.
The Carmel-based
company’s IPO has been a difficult one. KAR initially expected to raise $341 million selling 23 million shares at prices between
$15 to $17. But by Thursday it had scaled back those plans.
KAR, which auctions used and salvaged vehicles, has
suffered along with the rest of the broader auto industry during the sharp downturn in vehicle sales this year. With fewer
people buying new cars, fewer used and salvaged vehicles are coming up for auction.
Analysts said investors are
likely wary of KAR’s debt. According to recent regulatory filings, it owes creditors $2.5 billion.
The company
had $1.31 billion in revenue during the first nine months of this year and made a profit of $17.9 million.
Despite
its current problems, analysts believe that the market for used vehicles will increase as new auto sales slowly recover.
KAR’s offering is underwritten by banks that include Goldman Sachs, BofA Merrill Lynch and JP Morgan.
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