Shares of Forgent Power Solutions Inc (NYSE:FPS) fell 10.1% on Wednesday following the company’s announcement of a public offering totaling 30,000,000 shares of Class A common stock.
The proposed offering is divided between shares being sold by parent entities controlled by Neos Partners, LP and shares being offered directly by Forgent. Specifically, 20,688,335 shares will be sold by the Selling Stockholders controlled by Neos Partners, LP, while Forgent is offering 9,311,665 shares.
Both the Selling Stockholders and the company intend to grant the underwriters a 30-day option to purchase additional shares. The Selling Stockholders’ option would cover up to 3,103,250 additional shares, and the company’s option would cover up to 1,396,750 additional shares.
Forgent will not receive proceeds from the shares sold by the Selling Stockholders. Proceeds from Forgent’s portion of the offering, net of underwriting discounts and expenses, are designated to redeem interests in an operating subsidiary held by certain existing equity owners that are controlled by Neos Partners, LP.
Goldman Sachs & Co. LLC, Jefferies and Morgan Stanley are named as joint lead book-running managers for the offering. J.P. Morgan, BofA Securities and Barclays are listed as bookrunners.
Forgent designs and manufactures electrical distribution equipment used across several technical applications. The company’s products are employed in data centers, the power grid and energy-intensive industrial facilities, and it focuses on custom, engineered-to-order solutions for technically demanding uses.
Context and immediate market reaction
The company’s share price moved lower on the announcement of the offering. The filing details include the split between Selling Stockholders and the company, and the potential additional shares available to underwriters through their 30-day option.
What the offering will (and will not) do
- Forgent will not receive proceeds from shares sold by the Selling Stockholders controlled by Neos Partners, LP.
- Net proceeds from the shares Forgent offers will be used to redeem interests in an operating subsidiary held by certain existing equity owners controlled by Neos Partners, LP.
Company focus
Forgent’s product portfolio centers on electrical distribution equipment for data centers, grid infrastructure and energy-intensive industrial environments, emphasizing custom engineering for demanding technical requirements.