ConvaTec to Raise $1.8 Billion in London Initial OfferingJames Paton and Kristen Hallam
Shareholders include Nordic Capital, Avista Capital Partners
Medical products maker had $1.65 billion in 2015 sales
ConvaTec Ltd., a medical technology company whose shareholders include Nordic Capital and Avista Capital Partners, said it plans to raise $1.8 billion in London’s biggest initial public offering this year.
The proposed sale of at least 25 percent of ConvaTec’s shares would value the Reading, England-based company at about $7.2 billion. The proceeds would be used to pay down debt and enable existing investors to sell their stock, ConvaTec said Monday in a statement. The shares would trade on the London Stock Exchange starting in late October or early November.
ConvaTec’s IPO will be the biggest London listing to start trading in 2016, according to data compiled by Bloomberg. The maker of ostomy and wound-care products is seeking to tap investor demand for medical-device shares, one of the stock market’s best-performing industries this year. The Bloomberg World Health Care Products Index has risen 13 percent in 2016, outpacing the 1.3 percent increase in the Bloomberg World Index.
“We feel it’s just the right time for us,” Chief Executive Officer Paul Moraviec said Monday in an interview. “We’ve got very diversified cash flows as a company, and because of the chronic nature of the businesses that we serve, it’s very predictable and stable.”
The company had been part of U.S. drugmaker Bristol-Myers Squibb Co. when companies owned by Nordic Capital and Avista Capital Partners bought it in 2008. Last year ConvaTec generated $1.65 billion in sales, according to the statement. In the first six months of this year, the company had revenue of $828.9 million.
ConvaTec expects revenue growth in the “mid-single digits range’’ next year after about a 4 percent increase this year in constant-currency terms, Chief Financial Officer Nigel Clerkin said in the interview. The company expects to reduce its debt of $3.5 billion by about half after the offering, he said.
New products the company is focusing on include the next generation of anti-microbial technologies and negative-pressure wound therapy, a market valued at about $1.7 billion, Moraviec said. ConvaTec also started a program to expand its margins, he said.
Bank of America Corp., Goldman Sachs Group Inc. and UBS Group AG are jointly coordinating the sale.
Former GlaxoSmithKline Plc Chairman Christopher Gent will be appointed as chairman of ConvaTec after the stock is admitted to the exchange, ConvaTec said. Raj Shah and Thomas Vetander of Nordic Capital and Kunal Pandit of Avista Capital Partners will continue to serve on the ConvaTec board, the company said.
Nordic Capital explores all exit options for its portfolio businesses, but has most recently taken advantage of a buoyant Nordic IPO market with six share sales in the last two years including ConvaTec. Other recent offerings include payment solution provider Resurs Holding AB in Stockholm and Finnish retail chain Tokmanni Group’s listing in Helsinki, both in April.
ConvaTec’s offering would be London’s biggest since Worldpay Group Plc, which started trading last year and raised 2.16 billion pounds ($2.78 billion).
(An earlier version of this story corrected the name of UBS Group AG.)