Forgent Power Solutions prices $49 upsized offering as stock dips 11%

Forgent Power Solutions priced an upsized 43.7 million-share offering at $49 apiece, an 11% discount to the prior close. The stock fell 11% to $49.90 on Wednesday as the market absorbed the new supply.

The company will use net proceeds from its 14.6 million shares to redeem interests in an operating subsidiary held by existing equity owners controlled by Neos Partners, the private equity firm that backs Forgent. Neos-affiliated parent entities are selling 29.1 million shares in the offering and will receive all proceeds from that portion.

Goldman Sachs, Jefferies and Morgan Stanley are leading the underwriting syndicate, with J.P. Morgan, BofA Securities and Barclays serving as bookrunners. The underwriters have a 30-day option to purchase up to an additional 6.5 million shares. The offering is expected to close July 6.

The secondary sale comes after Forgent's stock more than doubled over the past year, driven by surging demand for electrical equipment used in data center construction. The company, which manufactures custom-engineered power distribution gear for data centers, the power grid and industrial facilities, is forecasting 85% revenue growth this year, according to InvestingPro data. The stock still trades at elevated valuation multiples despite the discount, reflecting the premium investors have placed on companies tied to the data center buildout.

The offering dilutes existing shareholders but also strengthens Forgent's balance sheet as it redeems the subsidiary interests. Investors will watch for the company's next earnings report to gauge whether order growth from data center customers can sustain the revenue trajectory that has driven the stock's rally.

This article is for informational purposes only and does not constitute investment advice.