Anaheim-based Select Interior Concepts Inc., installer and distributor of interior building products used in the residential and commercial real estate sectors, could soon see more than $350 million of its common stock traded for the first time on a public exchange.
Don’t call it an initial public offering, though, at least not yet.
The privately held firm, which provides interior design centers and installation services to homebuilders, filed a statement last week with the Securities and Exchange Commission to register about 25.6 million shares of its Class A common stock for trading on the Nasdaq Capital Market, an exchange for smaller-cap firms.
The shares would trade under the SIC ticker.
A schedule for the offering taking effect hasn’t been disclosed. Select Interior estimates the stock would initially trade at about $13.75 per share.
The company won’t be getting any proceeds from the proposed offering, whose shape and scope have gone through a few iterations over the course of the year, based on a reading of regulatory filings.
The shares being registered are owned by a variety of private shareholders who financed a $261 million private placement in November and December for Select Interior, which has grown operations through a number of debt-funded acquisitions over the previous few years.
Shares sold in last year’s B. Riley FBR Inc.-underwritten deal went for $12 apiece. Trive Capital, a Dallas-based private equity firm, was the main owner of the company prior to the private placement and remains a significant investor, with about a 9% stake.
Last year’s deal enabled Trive “to monetize a portion of their investment, while also providing Select Interior Concepts with needed growth capital to extend our leadership position in the market,” Select Interior Chief Executive Tyrone Johnson said at the conclusion of the private placement.
Selling stockholders for the forthcoming public offering “may offer the shares of our Class A common stock from time to time as they may determine through public or private transactions or through other means,” last week’s registration statement said. “We do not know when or in what amounts the selling stockholders may offer the shares.”
The company’s largest current shareholder is a fund managed by Los Angeles-based Solace Capital Partners LP, which owns a 13.7% stake, according to SEC filings.
As of early June, the company said it anticipated a two-phase offering of stock through both the private shareholder stock sale and via a traditional IPO, according to the registration statement and previous confidential filings with the SEC that were made public last week.
The IPO prospectus offering, whose potential size wasn’t disclosed in the prior confidential filings, isn’t currently part of the plan.
Home Design, Tiles
Select Interior has two main subsidiaries doing business as Residential Design Services and Architectural Surfaces Group.
The former serves a number of homebuilders with large area operations, including Irvine-based TRI Pointe Group Inc. and Miami-based Lennar Corp., by providing design, distribution and installation services to their homebuyers. The latter imports and distributes stone slabs and tile, through 22 U.S. warehouses.
Trive got involved in the company in 2014 when it bought Residential Design Services on undisclosed terms. The private equity firm began rolling up granite and tile businesses the following year.
On a pro forma basis, Select Interior’s combined companies posted sales of $367 million last year, and earnings before interest, taxes, depreciation and amortization of $22.7 million.
As of March 31, the company had $129.7 million in debt.
Its registration statement said it’s looking to the apartment construction market for more business and that it’s expanding cabinet supply and installation operations.
About 63% of its combined business is generated in California, with 98% of Residential Design’s sales in the Golden State.
The firm employs 960 people and has 44 locations, including two sites in Anaheim.
Its leased headquarters on East Hunter Avenue, which also includes Residential Design’s flagship design center, is 52,000 square feet.
