The stage is set for party goods retailer, Party City Holdco Inc. (PRTY), as it begins trading on the New York Stock Exchange today i.e. Apr 16. The initial public offering (‘IPO’) of 21.9 million shares are priced at $17.00 per share, at par with lower end of the expected range of $17 to $19 per share.

The underwriters of the offering will have a 30-day option to purchase up to an additional 3.28 million shares of common stock from the company at the initial public offering price, less underwriting discounts and commissions.

The lead underwriters for Party City’s IPO are Goldman Sachs (GS - Analyst Report), Morgan Stanley, MerrillLynch, Credit Suisse, and Pierce, Fenner & Smith Inc.

The party supply company is valued at $1.97 billion.

How It All Began

PartyCity opened its first store in East Hanover Township, New Jersey in 1986 in order to create a one-stop party supply shop. But soon, through acquisitions, partnerships and expansion, it became the largest party goods retailer in North America with approximately 900 stores throughout U.S. and Canada.

Should You Have PRTY in Your Portfolio?

Party City offers a one-stop shopping experience through a large selection of balloons, novelties, paper and plastic tableware, gifts, costumes and stationery for every day, themed and seasonal events.

The company is well positioned in the $10 billion retail party goods industry, owing to a broad merchandise assortment, deep selection and low-cost pricing of quality products. Party City, through its Halloween City franchise, also participates in the $7 billion seasonal Halloween market.

The company has grown over the years thanks to acquisitions of Party City, Party America Corp, Party Packagers, iParty Corp, and Factory Card and Party Outlet, which led to a more vertically-integrated business, due to increased profitability on manufacturing to retail margin.

Its e-commerce site launched in 2009 has brought in additional sales of $160 million in 2014. Party City expects to add an additional 350 stores.

But before jumping to buy this latest offering, investors should consider the following points.

Its debt stands at around $2.18 billion in 2014, more than double of $982.3 million due in 2011. In 2012, private equity firm Thomas H. Lee Partners LP acquired a majority stake in Party City in a $2.69 billion deal from its other private equity peers Advent International Corp, Berkshire Partners LLC, and Weston Presidio. Thomas H. Lee currently owns a 69% stake in Party City. Advent holds around 24% of the company. After the offering, the firms will own about 75% of the company.

The proceeds raised from this IPO will go toward paying off some of this debt, which includes $281 million pay-in-kind toggle notes, to mature in 2019. Other uses of the proceeds include paying a $30.7 million management termination fee to THL and Advent.

For the year ending Dec 31, 2014, Party City reported revenues of about $2.27 billion, comp sales growth of 5.8% and net income of $56.1 million. Party City has strong cash flows and is a mature company, but it expects to expand through new store openings.

The IPO scenario seems to be quite dull in the first quarter of 2015 as there were 34 deals worth $5.4 billion, half of 64 deals worth $10.6 billion in the first quarter of last year, according to Renaissance Capital. Amid the slowdown, on Wednesday, Xbiotech Inc. (XBIT) , an antibiotics developer, made its debut and gained 22%. Cidara Therapeutics Inc. (CDTX), which is working on fungal infection treatments, also made its debut on Wednesday, as did Aduro Biotech Inc. (ADRO).

Apart from Party City, investors might also be interested in today's IPOs of  Etsy Inc. (ETSY), KemPharm Inc.(KMPH) and Virtu Financial Inc. (VIRT).