IPL Plastics to price shares at bottom of IPO range

IPL Plastics, the Irish-headquartered maker of everything from ice cream cartons to refuse bins, has priced its initial public offering (IPO) at the bottom of its previously-indicated range, following a decline in the value of peers in recent weeks.

The company, which has about 2,000 legacy Irish investors, has raised Can$178 million (€115.7 million) before its listing on the Toronto stock market next Thursday, with the new shares on offer priced at Can$13.50 each. That was at the bottom end of a range, outlined by the company on May 22nd, that went up to Can$16.

Some Can$28 million of the fresh funds will be used to repurchase shares from existing shareholders who availed of a buy-back offer from the company, as they would otherwise not be able to trade stock for six months after the flotation.

IPL Plastics will have an initial market value of Can$720 million on admission for trading and an enterprise value, including debt, of just over Can$1 billion.

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Long-awaited listing

The long-awaited listing of IPL Plastics has taken place against the backdrop of as much as an 18 per cent slump in shares of London-listed rival RPC so far this month, as a result of concerns about a European Commission plan to ban the use of single-use plastic products.

While most of IPL Plastic's business is in North America, and only 28 per cent comes from consumer packaging products, sentiment towards the company has also been affected since the Irish company started its IPO roadshow on June 4th.

IPL Plastics’ IPO price still gives it an enterprise value of 8.5 times analysts’ 2018 earnings before interest, tax, depreciation and amortisation (ebitda), compared to a multiple of 6.2 times for RPC and 8.2 times for Berry Global, another peer.

Reshape

Set up 17 years ago as an investment company spun out from IAWS (now part of Aryzta), chief executive Alan Walsh has spent more than six years trying to reshape the business. Having sold down One51's broad collection of investments, including a stake in Irish Continental Group, and Irish Pride Bakers, the group is now focused on rigid plastics.

IPL said at the start of this month that its first-quarter earnings before interest, tax, depreciation and amortisation rose to US$17.1 million from US$14.6 million for the year earlier period as revenue jumped to US$148 million from US$112.5 million. However, the company’s margins have been squeezed since late last year as a result of a spike in raw material resin prices and US freight costs, as a result of tougher rules on truck driving times.