Kenvue, the patron arm of healthcare large Johnson & Johnson, was valued at $41bn in an upsized preliminary public providing that marked the most important US itemizing in nearly 18 months.
The carved-out firm bought $3.7bn of inventory at a worth of $22 per share — barely above the center of its worth vary, based on an individual aware of the small print. The inventory will start buying and selling on the New York Inventory Trade on Thursday.
The deal is the biggest for the reason that IPO of electrical car maker Rivian in November 2021, and alone will greater than double the sum raised in conventional US listings this yr.
Kenvue produces over-the-counter medicines and types reminiscent of Tylenol painkillers, Listerine mouthwash and Aveeno skincare merchandise. It reported income of $15bn and professional forma internet earnings of $1.5bn in 2022.
It additionally produces J&J’s child powder merchandise, which have been on the centre of years of authorized battles over whether or not they precipitated most cancers, and the brand new firm has already been focused in lawsuits. J&J couldn’t be instantly reached for touch upon the Kenvue providing.
J&J, which can proceed to personal greater than 90 per cent of Kenvue’s shares, has agreed to defend it from any authorized prices associated to gross sales of child powder within the US and Canada. Nonetheless, Kenvue cautioned in its prospectus that it “can not guarantee” buyers that the indemnity from its mum or dad can be adequate, and additionally it is going through claims associated to gross sales in different nations.
The US IPO market has been mired in one in every of its longest slowdowns in a long time since early 2022 due to a mix of rising rates of interest, risky inventory markets and pessimistic financial forecasts. Earlier than Wednesday’s deal, simply $2.4bn had been raised by means of conventional IPOs this yr, based on Dealogic information.
Kenvue is uncommon amongst IPO candidates in that it’s worthwhile, backed by a big mum or dad group, and plans to pay a $1.5bn annual dividend. As such, most bankers don’t anticipate it to set off an instantaneous surge in additional listings, however the deal is nonetheless being carefully watched throughout Wall Avenue as a take a look at of investor confidence.
“It’s fairly idiosyncratic, however . . . I believe it’s a superb signal,” stated a senior govt at a financial institution that didn’t work on the deal.
Goldman Sachs, JPMorgan Chase and Financial institution of America have been lead underwriters on the itemizing.
Inflammatory illness specialist Acelyrin is about to offer an additional take a look at for the beleaguered listings market within the coming days with the biggest biotech IPO since June 2021. It’s seeking to increase as much as $477mn at a valuation of as much as $1.6bn.
The biotech sector has been significantly laborious hit by the IPO freeze, as early-stage corporations depend on fairness gross sales to fund lengthy and costly drug developments.