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Taylor Morrison looks to raise $500M

by Taina Rosa | Published April 2, 2013 at 10:18 AM

Private equity-backed Taylor Morrison Home Corp. said in a Monday regulatory filing that it expects its initial public offering to come in at between $20 and $22 per share.

At the midpoint of $21 per share, the homebuilder would have an enterprise value of $2.6 billion, almost 2.2 times the $1.2 billion Oaktree Capital Management LP and TPG Global paid for Taylor Morrison when they acquired it from U.K. homebuilder Taylor Wimpey plc in July 2011.

If the IPO, for which the company originally filed in December, prices at the middle of the range, Taylor Morrison could raise as much as $500 million, or $575 million if the underwriters' option to acquire an additional 3.6 million shares is included.

The company plans to list on the New York Stock Exchange under the symbol TMHC.

Scottsdale, Ariz.-based Taylor Morrison builds single-family detached and attached homes and develops land, which includes lifestyle and master-planned communities in the U.S. and Canada.

Taylor Morrison is choosing to go to the public markets as the housing market makes a broad-based comeback. The company posted 2012 adjusted Ebitda of $228.8 million on revenue of $1.44 billion, up from adjusted Ebitda of $187.1 million on revenue of $1.37 billion. In 2012, net sales orders increased 17% from 4,129 homes to 4,842 homes, driven by healthier sales in the U.S., according to company information. "Our East region increased, from 1,617 homes to 2,077 homes, while our West region increased from 947 homes to 1,661 homes," the company said.

However, Canada, where home sales were not affected as much by the recession as in the United States, is starting to see some weakness. Taylor Morrison said home sales there decreased from 1,565 to 1,104 homes.

The private equity firms will have an 80.5% stake in the newly public company. If the underwriters' option is exercised, their stake would be 77.6%. Oaktree and TPG hold 98.2% of the company, split evenly between them. At the midpoint price per share, the firms' stakes together will be valued at $2 billion. With the underwriters' option included, their stakes will be worth $978 million.

If the offering goes as planned, Taylor Morrison will use $195 million of the proceeds to redeem $181 million in senior notes, with the rest going to its shareholders. Besides that, the company will use $275 million in proceeds from the offering plus $7 million of its cash on hand to buy back shares from TPG and Oaktree, as well as certain members of management.

Credit Suisse Group and Citigroup Inc. are joint underwriters for the offering.

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