American Pipe Giant Zekelman Industries Is Preparing an IPO

(Bloomberg) -- Zekelman Industries Inc., the largest independent steel pipe and tube manufacturer in North America, has filed confidentially for a U.S. initial public offering, according to people familiar with the matter.

The company has hired advisers for an IPO as soon as this year, said the people, who asked not to be identified because the matter is private. Including debt, Chicago-based Zekelman is aiming for a valuation of about $5 billion, two people said.

Zekelman has about $1.3 billion in total outstanding debt, according to data compiled by Bloomberg.

The company, which traces its roots to 1877, has been owned by the Zekelman family since 2011, according to its website. Barry Zekelman is chairman and chief executive officer of the company.

A representative for Zekelman didn’t immediately respond to requests for comment.

Zekelman makes pipes and tubing for bridges, railways, auto parts manufacturers, energy systems and construction framework. The company has annual sales of more than $2.7 billion, according to its website.

In recent years, it has benefited from stronger demand for its products as well as wider spreads between what it pays for steel and how much it charges customers, according to a report from Moody’s Investors Service Inc. in May. Cost cutting and acquisitions have also strengthened its financial performance, Moody’s said.

The company bought American Tube Manufacturing Inc. and Western Tube & Conduit Corp. last year.

Earnings Up

Zekelman generated $378 million in earnings before interest, taxes, depreciation and amortization, or EBITDA, during the fiscal year ending September 2017, Moody’s said. That was up from a range of of $155 million to $196 million in annual EBITDA in fiscal years 2013 through 2015, according to Moody’s.

Its IPO plans come during an uptick in U.S. listings of industrial companies, which includes building materials. Last year saw a decade-high $4.9 billion raised in new share sales, the most since the year before the housing crisis took hold, according to data compiled by Bloomberg.

Zekelman describes itself on its website as North America’s largest independent maker of steel pipe and so-called hollow structural sections, or metal tubes used in building beams and columns, among other things.

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