Waystar's shares fell in their Nasdaq debut on Friday, after the healthcare payments company raised $968 million in its U.S. initial public offering, in what was one of the largest deals of the year.

The company's stock opened at $21, slightly below the IPO price of $21.50, giving it a valuation of $3.50 billion. The stock traded as high as the IPO price earlier in the session before closing at $20.70.

Waystar, backed by Swedish private equity firm EQT AB and Canadian pension fund giant CPPIB, sold 45 million shares in the offering.

The progress in Waystar's IPO shows the market for new listings remains open after aluminium recycler Novelis pulled its stock market debut that would have raised as much as $945 million earlier this week.

The company, formed in 2017 through the merger of Navicure and ZirMed, develops payments software that helps clients like large hospital systems collect bills from patients.

EQT and CPPIB acquired a majority stake in Waystar from alternative investment firm Bain Capital in 2019, valuing the company at $2.7 billion. Bain stayed on as a minority shareholder.

Investment management firm Neuberger Berman and sovereign wealth fund Qatar Investment Authority had indicated an interest in buying up to $225 million worth of shares in the IPO.

PARING DOWN DEBT

Under EQT and CPPIB's ownership, Waystar has gained scale by acquiring some of its rivals, including eSolutions in 2020, which boosted its presence in the lucrative government health insurance market for the elderly, known as Medicare.

Waystar intends to use the IPO proceeds to repay outstanding debt.

“We are using the proceeds of the IPO to reduce our leverage, exposure and improve our capital structure and really position the company effectively for that durable long term path of continuing to transform a healthcare industry,” Waystar CEO Matt Hawkins told Reuters in an interview.

Goldman Sachs, J.P. Morgan Securities and Barclays Capital were the lead underwriters for the IPO.

(Reporting by Arasu Kannagi Basil in Bengaluru and Echo Wang in New York; Editing by Krishna Chandra Eluri and Josie Kao)