updated 11/16/2006 12:22:33 PM ET 2006-11-16T17:22:33

Shares of car rental company Hertz Global Holdings Inc. were little changed in their market debut on Thursday after pricing below the forecast range, the latest private equity-sponsored initial public offering to meet a lukewarm reception.

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The offering of more than 88 million shares raised $1.32 billion on Wednesday after selling for $15 per share. The forecast price range was $16 to $18.

At $15 a share, Hertz’s market capitalization is $4.8 billion.

The IPO came less than a year after flush private equity funds bought Hertz. An affiliate of Merrill Lynch & Co. and buyout firms Carlyle Group and Clayton Dubilier & Rice bought the company from Ford Motor Co. last December for $5.6 billion. Including debt, the deal was worth $15 billion.

“What happened here is that they overleveraged the company,” said Francis Gaskins, president of IPO Desktop, a research firm based in Marina del Rey, California. “It deserves a premium, but the premium is much higher than Avis/Budget or Dollar/Thrifty.”

Gaskins said the interest is 11 percent of revenue, assuming the company uses proceeds from the IPO to pay off debt.

“For a low-margin business, that’s too high,” he said. “It’s too high to get investors excited about future prices.”

Park Ridge, New Jersey-based Hertz, the world’s largest car rental company and one of the largest U.S. equipment rental businesses, plans to use proceeds from the IPO to repay debt and for general corporate purposes, according to a prospectus filed with the U.S. Securities and Exchange Commission.

In June, the company used a $1 billion loan and cash on hand to pay a $999.2 million dividend to stockholders.

The IPO was underwritten by Goldman Sachs, Lehman Brothers, Merrill Lynch and JPMorgan.

Deutsche Bank was dropped as an underwriter after an e-mail written by a Deutsche employee was forwarded to about 175 institutional accounts, according to a filing with the SEC.

According to an SEC filing by Hertz, the e-mails were distributed the week of Oct. 23 and might “constitute a prospectus or prospectuses not meeting the requirements of the Securities Act.”

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