The shares of hotel chain, Extended Stay America recorded an impressive rise of 16 per cent on the first day of its listing on the stock markets indicating that the investors are showing confidence in initial public offerings in the market.

The unique hotel chain that offers apartment-like rooms for longer periods, had priced its issue near the top of the range at $20 per share. The company had set a range of $18 to $21 for the initial public offerings and the shares rose as high as $23.90 and closed at $23.87 after recording an increase of 19.34 per cent on the first day.

The hotel chain, which focuses on mid-priced hotel rooms appearing to be apartments, raised about $565 million with the sale of 28.25 million shares. The company sold around 14 per cent stake and is now valued at around $4 billion. CEO Donald said the proceeds of the IPO will be used to pay off debt.

The chain headed by CEO Jim Donald, runs about 700 hotels. It had brought out of bankruptcy three years ago by investment firms Blackstone Group, Centerbridge Partners and Paulson & Co.