Bausch + Lomb prices IPO at $18 per share, below expectations
Bausch + Lomb Corp. priced its IPO at $18 a share on Thursday, below expectations as it became the first major company in months to try to go public in a turbulent stock market.
Bausch Health Cos., the parent company, raised $630 million in the offering. It aimed to raise up to $840 million and sell the shares for between $21 and $24 per share, according to a regulatory filing. The Wall Street Journal previously reported that the deal was likely to have a low or below-range price.
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The debut of the eye-care company, a spin-off of Bausch Health Cos., is being watched closely as a bellwether for the IPO market, which has been virtually closed since shares began falling earlier this year. . It is the first major initial public offering since private equity firm TPG Inc. went public in mid-January. After a banner year in 2021, traditional IPOs raised less than $3.3 billion in 2022, the slowest start since 2016, according to Dealogic.
Bausch is an appropriate test case for the IPO market, which provides a crucial tap of liquidity and visibility for startups and Wall Street. The company is profitable and an established name in its industry.
“This is a really critical week for the IPO market,” said Jeff Zell, senior research analyst at IPO Boutique. With so few IPOs so far this year, “it’s extremely important that this one not only gets off on the right foot, but trades stably in the secondary market,” he said. he declares.
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Among those who will be watching closely are others on the IPO trail. Fund managers say they have met with executives from companies such as Mobileye, the self-driving car unit of Intel Corp, this year. Other companies considering listing later this year include ServiceTitan Inc. and Quick Quack Car Wash Holdings LLC, according to people familiar with the matter.
It doesn’t help that markets have slumped lately, with the tech-heavy Nasdaq Composite up more than 3% on Wednesday and down 5% on Thursday. The index has moved at least 1% in either direction in 11 of the past 13 trading sessions.
Traditionally, volatility has been considered the most crucial indicator for the IPO market. When a company launches its IPO, the management team and its advisers spend several days on a so-called roadshow, meeting with fund managers to urge them to buy the stock. A volatile market, with little visibility over the next day and even less over the week, makes this tricky.
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According to the bankers, there was another, less well-liked factor that hampered the gears of the new issue market. The correlation between individual stocks in the S&P 500 has increased significantly in recent months as fears that rising interest rates could trigger a recession lead to widespread selling. This makes it harder for stock pickers and makes IPOs less attractive, some analysts say. Fund managers expect outperformance from IPOs, and if stocks move almost all in unison, the odds of doing so become longer.
In the three months before tech stocks began to slide in December on inflation and interest rate fears, the average stock moved in the same direction as the S&P 500 39% of the time, according to Ned DavisResearch. Since then, that figure has risen to 61%.
Some fund managers are welcoming the air in the IPO market.
Jonathan Coleman of Janus Henderson Investors, who oversees more than $14 billion spread across two funds, said last year that the IPO market had heated up so much that it had become difficult to receive meaningful allocations in offers. In the past, Mr. Coleman has said he thought the market was foamy when there were orders for 10 times the number of shares available in an average bid. From late 2020 to late 2021, order books were routinely 30 to 40 times oversubscribed, he said.
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“My experience is that if we lament the lack of IPOs now, we’ll lament the flood when the windows reopen,” he said.
Write to Corrie Driebusch at firstname.lastname@example.org
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