Dollar General shares rise in debut

PORTLAND, Ore. — A strong debut by Dollar General in its first day of trading may signal a warmer reception for public offerings, a market that nearly froze last year and has had a fitful recovery.Discount retailer Dollar General offered 34.1 million shares priced at $21, raising $716.1 million. Investors clamored for the stock, sending shares up $1.73, or 8.2 percent, to $22.73 Friday.The strong start was good news for its owner, investment firm Kohlberg Kravis Roberts, and other private equity owners who might be looking to unload portfolio companies and deliver some gains for their investors.Dollar General was public until 2007, when it was purchased for $6.9 billion by an investment group that included KKR, Goldman Sachs and others. The company's closing stock price Friday implies a value of $7.7 billion.KKR, through a subsidiary, remains by far the largest shareholder in the company, owning nearly 90 percent of the outstanding shares."I believe this was a litmus test of sorts for the private equity companies," said David Menlow, president of IPOfinancial.com. "If we continued to have private equity sponsored deals come into the marketplace and not work ... it was going to taint the waters for others that were certainly on their way."Investors, seeing it as a risky investment, shied away from IPOs during 2008, making it one of the slowest years for initial public offerings in more than 20 years. But as the market improved this year, more companies have gone to market.But not all the recent offerings by private equity firms have gone well, said Scott Sweet, founder of IPO Boutique.He noted a number of poorly performing offerings, such as Fortress Investment Group LLC IPO for RailAmerica in October, which immediately skidded as investors saw little potential in the railroad company after company insiders increased the number of shares and cut the price in the offering.Dollar General drew a lot of attention because KKR brought in new management, which helped trim unprofitable stores and improve its perfo

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