ConvaTec IPO could fetch nearly $2B

ConvaTec said today that it plans to raise about $1.8 billion in an initial public offering on the London Stock Exchange in the largest U.K. flotation this year, even as Great Britain prepares to exit the European Union.

The Danish wound dressing and colostomy supply maker, which is owned by private equity firms Avista Capital Partners and Nordic Capital, said today that it expects to put up at least 25% of its shares in the IPO. The statement confirmed rumors 1st aired in May that Convatec was asking investment banks to hire underwriters for an IPO of more than $1 billion; the flotation announced today would mean a market value of about $7.2 billion.

Proceeds from the offering are earmarked for cutting Convatec’s $3.5 billion debt load in half, CFO Nigel Clerkin told Bloomberg. The IPO is slated to close in late October or early November.

“We feel it’s just the right time for us,” CEO Paul Moraviec told the news service. “We’ve got very diversified cash flows as a company, and because of the chronic nature of the businesses that we serve, it’s very predictable and stable.”

Avist and Nordic bought the Convatec business from Bristol-Myers Squibb in 2008. The company posted sales of $1.65 billion last year; EBITDA was $226.2 million on sales of $828.9 million during the 1st half this year, it said today. Clerkin said the top line is expected to grow about 4% this year and in the “mid-single-digits range’’ next year in constant-currency terms.

Convatec said it plans to name ex-GlaxoSmithKline (NYSE:GSK) chairman Christopher Gent as its own chairman after the IPO.

Moraviec told Reuters that preparations for the IPO were under way for the best part of a year and were not affected by the “Brexit” vote.

“It’s a very resilient business,” he said. “[The IPO] is taking place as per our plans.”

In late 2014, reports surfaced that ConvaTec had appointed Morgan Stanley and Goldman Sachs to explore a sale of the company that could be worth as much as $10 billion.

($1 = €0.8906)

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