IPL Plas­tics flota­tion un­der threat as value of peer firms slumps

Price range set to be lower due to ri­vals’ slump if Canadian list­ing pro­ceeds

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE - Gavin Mclough­lin

A SHARP fall in val­u­a­tions at peer com­pa­nies has emerged as the big­gest threat to the planned IPL Plas­tics IPO.

An in­dus­try source said the fall has the po­ten­tial to scup­per the flota­tion al­to­gether. The IPO is still ex­pected to go ahead, but the per­for­mance of peer com­pa­nies RPC and Berry is likely to mean the com­pany brings for­ward a lower price range to mar­ket than would oth­er­wise be the case.

The price range is due to be dis­closed on Tues­day as IPL, for­merly known as One51, seeks to com­plete a list­ing in Canada. The com­pany re­ceived share­holder ap­proval for the plan at an ex­tra­or­di­nary gen­eral meet­ing on Thurs­day, but has re­peat­edly stated that there is no cer­tainty that an IPO will pro­ceed.

IPL chief ex­ec­u­tive Alan Walsh told re­porters last Thurs­day that in dis­cus­sions with share­hold­ers, the “over­ar­ch­ing feel­ing” is a strong de­sire to see the list­ing go ahead.

Asked about pric­ing by a share­holder, Walsh said “where the IPO gets priced will be de­ter­mined by a num­ber of fac­tors, in­clud­ing, in par­tic­u­lar, where our peer group is trad­ing at the time the IPO is priced, what the level of de­mand for the IPO is, etc.

“What we’re go­ing to at- tempt to do in the cor­re­spon­dence next Tues­day is give you a range within which we ex­pect the IPO will be priced, tak­ing into ac­count the ad­vice that we’re go­ing to re­ceive from our three un­der­writ­ing banks.

“Will the cur­rent share price be within that range? We cer­tainly hope so.”

Us-listed Berry has lost around 20pc of its value in the year to date, with more than $1bn wiped off its mar­ket cap­i­tal­i­sa­tion. The last four weeks have been par­tic­u­larly dif­fi­cult for the share price.

RPC, listed in London, is down 8pc so far this year.

Can­tor Fitzger­ald eq­uity an­a­lyst Wil­liam Hef­fer­nan told the Sun­day In­de­pen­dent that, de­spite the re­cent com­pres­sion in val­u­a­tions in the sec­tor, Can­tor “wouldn’t be too wor­ried” be­cause “the earn­ings growth po­ten­tial of IPL is still in place”.

“It’s a bit of a dif­fer­ent model [to RPC and Berry] be­cause of its re­gional rev­enue and ebitda break­down.”

Hef­fer­nan said com­pa­nies pric­ing an IPO have to strike a bal­ance between aim­ing too high, which might not be achiev­able, or aim­ing too low, which may de­press mar­ket con­fi­dence.

He added that if man­age­ment is tak­ing the fall in peer val­u­a­tions into ac­count for pric­ing “that’s not nec­es­sar­ily a bad thing with re­gard to be­ing pru­dent and with re­gard to the over­all suc­cess of the IPO”.

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