Convatec to pursue London listing
Convatec announced plans to raise gross primary proceeds of $1.8bn by means of an initial public offer on the London market.
The self-described global medical products and technologies group specialises in the treatment of chronic conditions.
Following admission, the Uxbridge-based company intended to target a free-float of at least 25%.
Its strategy is to capitalise on the trend towards an ageing global population, an increased prevalence of chronic ailments and increased life expectancies of patients suffering those conditions.
As a result, management forecasts that its main markets of advanced chronic and acute wound care, ostomy care, continence and critical care, and infusion devices used in the treatment of diabetes and other conditions will grow at roughly 4% to 6% a year.
The proceeds from the IPO would be used to lower the company´s borrowings, thus lowering its ratio of net debt to adjusted earnings before interest, taxes, depreciation and amortisation for the twelve months ending on 30 June 2016 to 3.5 times.
The company´s medium target was to lower its ratio of net debt to EBITDA below 2.0 and achieve an average cost of borrowing of approximately 3.5%.
Significantly, such conditions are non-discretionary, the company said in a statement, meaning that its revenue streams are not cyclical.
In 2015, the firm, which operates in over 100 countries already, obtained 75% of its sales from products for patients suffering chronic care conditions, achieved revenues of $1.65bn and adjusted earnings before interest and taxes of $436.8m.
At the half-year stage of 2016, those same metrics stood at $828.9m and $209.0m.
Convatec said it was pursuing a three-pronged strategy aimed at growing its business by launching new products, entering new large markets with high-growth potential and deepening its engagement with patients via investments in its direct-to-consumer offerings.
Management would target a payout ratio of between 35% and 45% of adjusted net income over time.