IPO NIGHTMARES

Sleep Country falls 5% on its maiden day of trading.

Sleep Country Canada Holdings Inc., the nation’s largest mattress retailer, fell in its trading debut after raising $300 million in an initial public offering.

Sleep Country slid five per cent to $16.15 at close in Toronto, down from a $17 IPO price.

“It’s a lesson to be learned,” said David Cockfield, a fund manager at Northland Wealth Management in Toronto, whose firm oversees about $325 million and opted not to participate in the IPO. “Often this is the way it goes: IPOs are hot, hot, hot and everyone thinks it’s easy money, then along comes one that doesn’t act that way and you get bit.”

Sleep Country is set to be Canada’s third company to fall on the first day of trading this month. Mining company TMAC Resources Inc., which raised $135 million, slid 5.8 per cent on its July 7 debut. Crown Capital Partners Inc., which raised $65 million, plunged 8.2 per cent on its July 9 start.

Telephone and email messages left with Sleep Country chief financial officer Robert Masson weren’t immediately returned.

“You’ve got a bit of overexcitement in the IPO market in my opinion, people have been charging in,” Cockfield said. “Maybe this will give people pause to consider whether they really want to own some of these stocks.”

Sleep Country, founded by Stephen Gunn, Christine Magee and Gord Lownds in Vancouver in 1994, returns to Canada’s main stock market seven years after Toronto-based private equity firm Birch Hill Equity Partners Management Inc. and Westerkirk Capital Inc. bought the business.

The company today has 215 stores across eight Canadian provinces, including 47 outlets in Quebec under the Dormez-vous brand.

Sleep Country’s IPO was led by Toronto-Dominion Bank and Bank of Montreal. The banks have an option to buy an additional 15 per cent of the offering, which would lift proceeds to $345 million.