Medical tech firm ConvaTec braves London market with $1.8 bln IPO: Reuters

LONDON Oct 26 (Reuters) — Medical products maker ConvaTec raised nearly 1.5 billion pounds ($1.8 billion) in London’s biggest initial public offering (IPO) of 2016 on Wednesday, although it was priced at the bottom of the range in tough market conditions.

Uncertainty over Britain’s decision to leave the European Union has hit the value of companies listing in London, which fell to the lowest level in four years in the first nine months of the year according to Henderson Managed Investment Trusts.

ConvaTec’s shares traded just below their offer price of 225 pence at 224.50 pence, with around a tenth of the stock having changed hands during conditional trading ahead of admittance to the main market next week.

The previously announced price range for ConvaTec, which said its total market capitalisation would be 4.39 billion pounds, was between 225 pence and 275 pence in what sources said was a tough IPO environment, with some listings cancelled and others trading badly.

However, a source said the ConvaTec flotation was oversubscribed, with 40 percent of the buyers from the U.S. and many of them long-term investors.

Another source said that banking software company Misys (IPO-MISY.L) was also going ahead with its IPO on Friday, and with the investor book-building expected to close on Thursday afternoon, sources said it had already been covered.


New listings on London’s main market and Alternative Investment Market (AIM) were down 42 percent at 948 million pounds ($1.16 billion) in the third quarter compared with a year earlier, the Henderson research said.

It also showed AIM was outperforming the main exchange and on Wednesday, UK engineering contractor Van Elle raised 40 million pounds via an AIM IPO.

ConvaTec said it would receive 1.47 billion pounds from the offer, which would be primarily used to redeem or repay debt.

The offer represents around 33.8 percent of the company’s stock, assuming no exercise of an overallotment option, and will rise to 38.9 percent if the option is exercised in full.

ConvaTec said Nordic Capital and Avista Capital Partners will hold 45.1 percent and 19.5 percent of the shares, respectively, assuming no exercise of the overallotment option.

Goldman Sachs International, Bank of America Merrill Lynch and UBS acted as joint global coordinators on the deal, while Credit Suisse, Deutsche Bank, JP Morgan Cazenove and Morgan Stanley were joint bookrunners. ($1 = 0.8192 pounds) (Additional reporting by Noor Zainab Hussain; Editing by David Holmes and Alexander Smith)