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. 



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