Real-estate brokerage firm Re/Max Holdings Inc. (RMAX) held its initial public offering (IPO) Wednesday morning, selling 10 million shares at $22 a share. The offering priced above the expected range of $19 to $21 a share. Shares rose quickly to $26.25 before pulling back slightly.
In its IPO filing, Re/Max said it plans to use about $27.3 million of net proceeds from the IPO to reacquire franchise rights in the Southwest and Central Atlantic regions. The remainder of the proceeds will be used to purchase common units in a holding company, RMCO LLC, which will be Re/Max’s sole asset.
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Whether now is a good time for this IPO is arguable. Realogy Holdings Corp. (RLGY), which owns the Century 21 real-estate brokerage chain, came public in October of last year and its stock, though up nearly 25% since then, has dropped from a peak of around $55 a share in mid-May to around $43.40 a share today.
Whether now is a good time for any real-estate firm to go public is at least arguable. On one hand, the U.S. housing market recovery appears to be solid if slow-moving, and expectations for an improved inventory of homes for sale is a good sign for real-estate brokers. On the other hand, rising house prices and rising mortgage rates have cooled some enthusiasm among potential buyers, at least temporarily.
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Less than an hour after the market opened this morning Re/Max shares are trading up nearly 20% at $26.32.