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UPDATE 2-CD&R-backed Core & Main valued at $7 bln as shares rise in debut

Reuters logo Reuters 7/23/2021

(Adds company and industry background)

July 23 (Reuters) - Core & Main Inc, the water infrastructure company owned by Clayton, Dubilier & Rice (CD&R), gained a valuation of $7 billion as its shares rose over 8% in their market debut on Friday.

The stock opened at $21.70 per share compared with the initial public offering price of $20 per share.

Core & Main, which has 285 branch locations and a headcount of 3,700, has completed 12 acquisitions since becoming an independent company in August 2017.

In a regulatory filing earlier, the company has said it would continue to pursue such deals, given the highly fragmented market it operates in.

The newly listed company is sensitive to activity in the residential and non-residential construction markets in the United States.

Last year, demand for its products softened due to the pandemic, notably in areas where governments more narrowly defined which services constitute "essential services" with respect to construction activities.

The United States is now seeing a severe shortage of residential accommodation, which has boosted prices and sparked bidding wars across the country. Demand for houses is being driven by low mortgage rates and a desire for more spacious accommodations during the COVID-19 pandemic.

The company provides water, wastewater, storm drainage, fire protection products and related services to municipalities, private water companies and contractors. CD&R bought the company in a $2.5 billion deal from HD Supply Holdings in 2017.

CD&R will control about 79.6% of the total voting power of Core & Main after the offering, according to the filing.

Core & Main raised nearly $698 million by selling 34.9 million shares at the lower end of its earlier price target between $20 and $23 each.

Goldman Sachs & Co, Credit Suisse and J.P. Morgan were the lead underwriters for the offering. (Reporting by Niket Nishant in Bengaluru; Editing by Shinjini Ganguli and Maju Samuel)

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