Delphi gets ready for IPO
Delphi Corp. is asking the Securities Exchange Commission for clearance to sell shares in the company through an initial public offering of stock.
The list of hedge funds and private investment funds preparing to sell shares in what is now London-based Delphi Automotive PLC, includes Paulson & Co., Elliott Associates, L.P. Elliott International, L.P., Silver Point Capital and Oak Tree Capital , the documents , Delphi said in a SEC filing
Delphi didn’t specify the size of the offering but the it is expected to top $100 million, according to the SEC documents, which said the IPO will be managed by J.P. Morgan and Goldman Sachs.
Delphi filed for bankruptcy in 2005 in a bid to scrap what it described as an unsustainable business model that included a heavy reliance on its former parent and large manufacturing base in the United States. The bankruptcy wiped up Delphi’s old shareholders and left the company’s salaried pension fund in the hands of the Pension Benefit Guarantee Corp.
The Troy-based automotive supplier spent four years in bankruptcy before emerging from bankruptcy with a much smaller manufacturing presence in the U.S. and a focus in supplying safety equipment, fuel-management and electronics.
The new Delphi is now counting on growth in the automotive market in the next few years to impress would be investors.
Global vehicle production is forecast to grow at a compound annual growth rate of 6.8 percent from 2010 to 2015. In the near term, the mature markets, including North America and Western Europe, are expected to grow at 3.3 percent from 2010 to 2015 for an increase of approximately 6.9 million units, while the emerging markets are forecast to grow at 10.3% during the same period, for an increase of approximately 22.2 million units.
“We expect that nearly half of our total future growth will be generated from emerging markets, especially China, which now represents a larger market for automotive components than either the United States or Japan. As a consequence of this shift in demand, many automotive manufacturing and supply companies have located operations in China and have entered into strategic partnerships and supply arrangements designed to support increased production, the SEC documents said.
“Acquisitions and strategic alliances represent an important element of our business strategy and we believe we have the financial flexibility to pursue these opportunities with our current capital structure and liquidity profile. We believe that there are opportunities to grow through acquisitions, given the trend by OEMs to source globally and from a smaller number of suppliers, and that strategic alliances will allow us to pursue new opportunities faster and with less risk and investment,” Delphi said in its SEC filings.
Delphi also said it intended to pursue selected transactions that leverage its technology, enhance its customer base, geographic penetration and scale to complement the company’s existing businesses.
The “complementary opportunities” will provide us with access to new technologies, expand our presence in existing markets and enable us to establish a presence in adjacent markets, Delphi said in its filing.