Peabody Energy Shares Surge in Trading Debut

Investors embraced the latest stock offering from the buzzing energy sector, pushing the shares of Peabody Energy Corp. (ticker symbol: BTU), one of the world’s largest coal companies, 31% higher in their debut Tuesday.

Against a backdrop of soaring coal prices and a broader market rally, Peabody Energy’s shares closed at $36.80 on the New York Stock Exchange, after a larger-than-expected $420-million initial public offering. The stock, one of the most active on the NYSE with 10.4 million shares changing hands, was priced at $28 a share.

The debut gave the St Louis-based company a market value of about $1.8 billion, based on 49.6 million shares outstanding.

“You’ve had a good recovery off the Nasdaq’s low on April 4, you have a quality stock coming to market, and it’s from a sector that is quite hot,” said John Fitzgibbon, IPO editor at financial information provider WFNusa.

Peabody Energy, which calls itself the world’s largest private sector coal company, is responsible for 9% of U.S. electricity generation and 2.5% of worldwide generation, according to documents filed with U.S. securities regulators.

The company went public in a welcoming environment for energy-related IPOs. In the last six months spot prices of coal have jumped as demand has surged, and last week President Bush endorsed a national energy plan that called for increased coal production.

Global Power Equipment Group Inc. (GEG) debuted on Wall Street last week in a $147-million IPO and its shares are trading nearly 77% above their offering price.

Indeed, energy offerings have made up more than one-third of the 32 companies that have gone public in 2001. Most have increased the price and sometimes the size of their offerings before debut and are among the best-performing IPOs of the year.