Avantor Gets Modest Trade Debut Bump After $2.9 Billion IPO

(Bloomberg) -- Avantor Inc., a chemical maker for the life-sciences industry, climbed 3.6% in its trading debut after raising $2.9 billion in the second-biggest initial public offering of the year.

Two smaller companies fared far better in their U.S. trading debuts Friday. Luckin Coffee Inc. closed up 20% after raising $561 million, while Fastly Inc. ended its first day of trading up 50% after its $180 million listing.

Avantor, owned by New Mountain Capital, sold 207 million shares for $14 each on Thursday. Avantor had increased the number of shares for sale earlier Thursday, but dropped the price range to $14 to $15 each from a previous target of $18 to $21.

Avantor’s shares opened at $14.72 in New York Friday and rose as much as 6.8%. They closed at $14.50, giving the company a market value of $7.62 billion.

The offering supplants ride-hailing provider Lyft Inc. as 2019’s global No. 2 and is topped only by the $8.1 billion listing by Lyft’s behemoth rival, Uber Technologies Inc. While Avantor isn’t profitable, it isn’t saddled with multibillion-dollar losses like Lyft and Uber, whose shares have dropped about 25% and 7% respectively since their IPOs amid heightened volatility and an escalating U.S.-China trade war.

Lyft’s market value of $16 billion still exceeds that of Avantor.

“We will apply all the proceeds to reshape the balance sheet and position us in a strong way to invest in innovation and grow the business through acquisitions,” Chief Executive Officer Michael Stubblefield said in an interview with Bloomberg. “This business generates a significant amount of cash. The de-leveraging of our balance sheet has been moving at an accelerating pace and we’re nearing our target. For the right opportunity, we would be able to reach in and complete an acquisition.”

Avantor has about $9 billion in debt, according to data compiled by Bloomberg.

The company is based in Radnor, Pennsylvania, and is the former specialty chemicals arm of Covidien Inc., which New Mountain acquired in 2010. In 2017, Avantor acquired lab supplier VWR Corp. for about $6.4 billion.

Sales Balloon

Avantor’s net loss available to common stockholders narrowed to $356 million last year as sales ballooned to $5.9 billion after the VWR deal was completed, according to its filings. That compared to a net loss of $415 million on the same basis on $1.25 billion in sales in 2017.

The company’s health-care operations help drug companies research, develop and manufacture medicines ranging from gene and cell therapies made with living organisms to vaccines and traditional chemical compounds. Avantor offers about 6 million products, which are available through 240,000 of its customers’ locations in 180 countries, according to its filing. Its products are involved in the production of more 80% of all biotechnology drugs, Stubblefield said.

Avantor also makes materials like silicone that are used in medical devices, drug delivery and skincare, as well as chemicals and equipment needed to conduct diagnostic tests for conditions like blood cancers and immune system disorders.

The offering was led by Goldman Sachs Group Inc. and JPMorgan Chase & Co. Shares are trading on the New York Stock Exchange under the symbol AVTR.

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