Legence IPO: Blackstone-backed engineering firm raises $728 million in Nasdaq IPO

Early trading in shares of Blackstone-backed HVAC firm Legence has started on the Freedom client platform. Later today, September 12, the name will be listed on the Nasdaq exchange under the symbol LGN.

Engineering and maintenance services provider Legence raised $728 million in its IPO yesterday, September 11. It sold 26 million shares priced at $28, within its marketed range of $25 to $29 apiece. This gives Legence a valuation of $2.85 billion, Reuters noted.

The underwriters of the offering will be granted a 30-day option to purchase up to an additional 3.9 million shares at the IPO price, less underwriting discounts and commissions.

The deal was run by Goldman Sachs, Jefferies, BofA Securities, Barclays, Morgan Stanley, RBC Capital Markets, Societe Generale, BMO Capital Markets, Cantor Fitzgerald, Guggenheim Securities, Wells Fargo Securities, Nomura Securities, MUFG Securities America, Roth Capital, Santander, Stifel, TD Cowen, BTIG Securities, and Rothschild.

After completion of the IPO, funds managed by Blackstone will control about 74% of the voting power, Bloomberg notes.

The San Jose, California-based Legence, founded in 1963, provides engineering, installation, and maintenance for HVAC, plumbing, and other building systems. It touts a focus on high-growth sectors that have technically demanding buildings like data centers.

Blackstone, the world's largest alternative investment management company, agreed to buy Legence in 2020, when it was known as Therma Holdings. It was exploring options including a sale or IPO of the company that valued it at as much as $5 billion including debt last year.

The company had a net loss of $26.5 million on revenue of $1.1 billion in the first six months of this year, versus a net loss of nearly $8.8 million on revenue of $989.6 million in the same period a year earlier.

Legence had $2.8 billion of backlog and awarded contracts as of June 30, up 29% year over year.

Freedom analyst Alem Bektemirov has highlighted competition from companies such as Honeywell International, Siemens, Schneider Electric, Hitachi, Cleerly, and Hikvision as the main risk for Legence.

According to his estimates, Legence has a fair value of about $3.22 billion, or $31.60 per share, 13% above the IPO price. To calculate this figure, Bektemirov factored in the industry average EV/S ratio of 2.17, the company’s trailing 12-month revenue of $2.21 billion, balance sheet debt of $1.50 billion, and cash of $97.9 million.

Legence's IPO is driven by growing operating profit and cash flow, but topline revenue growth is decelerating and net losses persist, points out Donovan Jones, head of IPO Edge. The proceeds will be used primarily to reduce significant debt, aiming to lower interest expenses and improve financial flexibility.

The building management systems market is large and expanding rapidly, providing strong industry tailwinds for Legence’s future growth, Jones believes. Among the key risks he highlights rising selling expenses, client concentration, exposure to fixed-price contracts, and intense competition.

The U.S. IPO market has shown signs of post-Labor Day strength as a slew of companies launched their roadshows to go public, incentivized by a strong equity market, hopes of rate cuts, and the fading anxiety around President Trump's tariffs, writes Reuters.

According to IPOX analyst Lukas Muehlbauer, recent jobs data signals a slowing economy but also a higher likelihood of a near-term Fed rate cut and reduced market volatility, factors that could further support a positive outlook for IPOs this autumn.

Transit tech company Via, coffee chain Black Rock Coffee Bar, and crypto exchange Gemini are also going public today.

_______________________

Freedom Broker clients will be able to trade Legence shares before the start of the main U.S. session. Premarket trading will open 2-3 hours early, at 15:30-16:30 Astana time. Investors can participate by selecting the ticker LGN.US on the Freedom platform.

The AI translation of this story was reviewed by a human editor.