Units of Hi-Crush Partners LP, which makes proppants used in hydraulic fracturing, closed up 18 percent in their market debut on Thursday as investors bet on the growing demand from the oil and gas industry. The boom in shale drilling has led to high demand for fracking materials such as guar gum and proppants. However, this had led to shortages as proppant makers cannot keep up with rising demand.
Hi-Crush, like several companies that went public in recent weeks, had to price at the low-end of its expected price range to attract investors in a faltering IPO market.
"Underwriters have hurt a lot of people with some of the deals this year and it's refreshing to see a fair-priced range," senior managing partner of IPO Boutique, Scott Sweet said.
Hi-Crush, which caters to oilfield service providers Halliburton Co and Baker Hughes Inc, opted for a limited partnership structure which is favoured by investors as it distributes most of its profit.
"Investors are starved for limited partnerships that pay high returns," Francis Gaskins, editor of IPOdesktop.com.
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