The stock opened at $9.06 a share on the Nasdaq, up slightly from its initial offering price of $9, but quickly zoomed higher, peaking at $17.90 before closing at $15.39, up 71%.
Analysts attributed the gain less to the company's business fundamentals than to the small, 1.8 million-share "float," just 1.4% of its total shares.
Caesars' first day was the best IPO performance in the U.S. since real-estate website Zillow Inc. soared 78.9% in July; that deal was also small, at 3.5 million shares. Zillow closed Wednesday at $32.28, up 61% from its IPO price but below its first-day close.
Under a deal Caesars worked out with its prior investors, around 19% of the company could be sold by some private holders after the IPO, as well as 9.9% owned by hedge-fund manager Paulson & Co. Paulson will be able to sell its shares right away, while some other investors are able to sell half their shares right away and the remaining half in 180 days.
The company's largest owners, private-equity firms Apollo Global Management LLC and TPG Capital LLC, aren't among the current sellers.
In 2008 Apollo and TPG each put in around $1.5 billion in the original deal that took the company private for 50% of the company, while loading it with debt, according to a person familiar with the matter. Other investors together bought an additional 50% for $3 billion, this person said.
The investments were diluted in 2010 when Paulson converted debt to a 9.9% stake in the company. That year, Caesars planned to raise around $532 million to put into the company, but canceled that after investors balked at the high debt levels and few growth options. Under the IPO price this week, the original investments were worth 18% of what most of the investors that were poised to sell shares put into the company, but by Wednesday that had already risen to around 29%, according to calculations based on information from the person familiar with the matter. For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today
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