Intrepid Potash Soars 58% In Debut After Strong IPO

Intrepid Potash roared out of the starting gate Tuesday, rising 57.5% to 50.40.
The fertilizer maker went public at $32 a share, 14% above the midpoint 15f its proposed range. Intrepid had raised its price target from $24 to $26 in April and expanded the offering size to 30 million shares from 24 million.

This was exactly what IPO watchers expected.

"The price came out spot-on with what we were looking for," said analyst Ben Johnson of Morningstar. "We knew there was going to be a lot of demand."

Analyst Matt Therian of Renaissance Capital, an IPO research firm, also said that "we are not surprised by the first-day action."

The reason for the high expectations is the record demand for crop fertilizers amid the agricultural boom. Just last week, China's Sinofert ordered 1 million tons of potash from Canada for $576 a ton -- up 227% from last year's pact.

Sinofert had to cough up because supply is so limited. There are only 20 commercial potash deposits in the world, and just seven firms control 83% of production.

Intrepid Potash produces just 1.5% of global potash. But it's the largest player in the U.S., smack in the middle of the world's biggest market.

Intrepid thinks lower transport costs give it an edge over the dominant Canadian producers, including Potash Corp. of Saskatchewan (NYSE:POT - News) and Agrium (NYSE:AGU - News). Potash releases quarterly results Thursday.

The concentrated supply means that there probably aren't more potash firms waiting to go public. But the overall IPO market is showing signs of picking up.

IPOs are off 66% from the same point 14 2007, according to Renaissance's IPOhome.com. Intrepid is April's first debut after just three in March, though that included Visa's (NYSE:V - News) record U.S. offering.

But four more companies are lined up for this week alone -- a water utility, a small tech firm and two REITs. An oil and gas producer and a solar-power firm have also recently announced terms.

"The supply-demand fundamentals in the IPO market are just as strong (as in potash)," Johnson said. "There's limited supply and plenty of pent-up demand there."