Smith Douglas Homes Targets $1B+ Valuation In First Big IPO Of 2024

Smith Douglas Homes is seeking a $1.08 billion valuation in what will be the first big IPO of the year. Here’s a look at everything you need to know ahead of the listing.

IPO Details: Smith Douglas Homes will offer 7,692,308 shares at an estimated price of between $18 and $21 per share in its initial public offering on Thursday, the company said in a regulatory filing last week.

The Georgia-based home builder is expected to announce pricing details Wednesday night, but based on the estimate in the company’s amended S-1 filing, Smith Douglas could potentially raise up to $161.5 million in the offering.

The prospectus states that Smith Douglas Homes plans to use some of the proceeds from the offering to continue the expansion of communities and overall growth of its platform. The company also plans to repay approximately $71 million of borrowings outstanding under its existing credit facility and $1.2 million in notes payable to related parties.

JPMorgan, Bank of America, RBC Capital, Wells Fargo, Wolfe/ Nomura Alliance and Zelman Partners will act as the joint book-runners for the offering. The company will be listed on the New York Stock Exchange on Thursday and trade under the ticker symbol “SDHC.”

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About Smith Douglas Homes: Founded in 2008 and based out of Woodstock, Georgia, Smith Douglas Homes designs and builds single-family homes in the Southeastern and Southern United States using an efficient land-light, production focused business model.

The home builder primarily targets “entry-level and empty-nest homebuyers,” providing a personalized home buying experience at affordable price points.

“As a result of our differentiated value proposition and efficient construction cycle times, we believe we typically achieve a high level of homebuyer satisfaction and experience low cancellation rates,” the company said.

Smith Douglas Homes was ranked the second-largest private builder based on 2022 closings by the Atlanta Real Estate Forum last year. Atlanta is the company’s biggest market, with over 1,000 closings in 2022. The home builder closed 2,200 homes in total in 2022. The average selling price per home was approximately $333,000 during the nine months ended Sept. 21, 2023.

As of Sept. 30, Smith Douglas Homes’ debt-to-book capitalization was 29% and the company had $10.4 million in cash and equivalents.

“Following this transaction, we believe our enhanced liquidity position will allow us to react nimbly to market conditions and to pursue attractive organic growth or acquisition opportunities,” the company said.

At publication time, the SPDR Series Trust SPDR Homebuilders ETF XHB was down 0.1% at $93.95 while the IShares U.S. Home Construction ETF ITB was down 0.38% at $100.17.

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