AZ Electronic Raises IPO Target to $700 Million

AZ Electronic Materials, which produces chemicals used in Apple iPads, aims to raise $700 million in a London IPO, Reuters reported. The company, which is owned by private equity shops The Carlyle Group and Vestar Capital Partners had previously set the IPO target at $400 million. The offering from the London-based company is set to be Britain’s third largest this year.

(Reuters) – AZ Electronic Materials, a maker of chemicals used in Apple’s iPad, narrowed the price range on its London listing, sources said, boding well for its private equity owners’ plans to cash in on half of their stakes.

The $700 million initial public offering (IPO) is set to be Britain’s third biggest this year, behind a $1.9 billion sale by energy group Essar in April and a $1.1 billion deal from mining investment vehicle Vallar in July.

AZ has narrowed its price range to 240 to 250 pence per share, two sources close to the deal said on Thursday, after books were covered at the midpoint of its initial price guidance of 200 to 280 pence earlier this week.

Books are due to close later on Thursday.

“We have got a very big and high quality book of demand,” said one of the sources.

On Wednesday the company increased the amount it planned to raise from the offering to $700 million from $400 million, after private equity firms Carlyle Group and Vestar Capital Partners — who each own 41.8 percent stakes in AZ — said they planned to reduce their holdings to around 21 percent each, a source said.

AZ, which has its main offices in Britain although its chief executive is based in Hong Kong, said it planned to use the $400 million raised from the sale of new shares to repay debt.

A $400 million debt paydown would roughly halve AZ’s net debt, a person familiar with the matter told Reuters earlier this month, bringing its leverage to a level more palatable to investors.

Carlyle bought AZ from Clariant AG in 2004 in a deal that valued the company at 338 million euros including debt, Thomson Reuters data show.

AZ, which makes 70 percent of its revenues in the far east, supplies leading makers of integrated circuits and flat panel displays, including Samsung, Toshiba and Hynix.

It recorded revenue of $610.6 million and adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of $200.3 million in the 12 months to end-June.

By Kylie MacLellan (Editing by Jon Loades-Carter)