Select the account you'd like to open

Avantor to join the IPO party

Avantor is a chemical company that was acquired by private equity company New Mountain Capital in 2010 from Covidien. It is looking to raise $4.4bn at around $19.50 a share, the price range of the IPO being between $18-$21.

The company provides services and products in education, healthcare and biopharma and while it appears to have seen decent revenue growth, $5.8bn in 2018, largely due to acquisitions, it hasn’t made a profit in the last three years.

The proceeds of the IPO won't be going to grow the business, but to the investors who have loaded the company with up to $6.9bn in debt, more than the company's total revenues for its last tax year, and any previous tax year for that matter.

This ought to be a red flag; typically these types of fund raisings should look to enhance the value of the business, or at least reduce the burden of the company’s debt.

This IPO does nothing of the sort, and appears only to be enriching its owners, which should make any prospective investor a little bit nervous.

Having seen the much higher profile Lyft and Uber IPOs belly flop in the last few weeks, it would appear that investors are wising up to the motives behind some of these IPOs.

Let’s see if they are equally discerning about this particular one. 

Disclaimer: CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.

Sign up for market update emails