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IPO Report: U.S. IPO market bracing for second-biggest deal of the year so far in eyecare health company Bausch + Lomb

The U.S. initial public offering market is bracing for what is expected to be the second-biggest deal of the year so far this week, that of eyecare company Bausch + Lomb, which is expected to raise up to $840 million at a valuation of more than $8 billion.

The company is offering 35 million shares priced at $21 to $24 each. With 350,000 shares expected to be outstanding after the offering, the company would be valued at $8.4 billion at the top end of the price range.

The biggest deal so far was that of private-equity firm TPG Inc.
TPG,
+1.12%
,
 which raised $1 billion in January some 30 years after launching under the name Texas Pacific Group. That company was valued at $9 billion.

Also Read: The TPG IPO: 5 things to know about private-equity firm valued at $9 billion

The company is being spun out of healthcare company Bausch Health Inc.
BHC,
-2.24%

and will list on the New York Stock Exchange and TSX under the ticker “BLCO.”

” While it faces significant competition from other brands and generic products, the company is highly profitable with strong cash flow, and it has global brand awareness of more than 70%,” said Renaissance Capital, a provider of IPO exchange-traded funds and institutional research in commentary.

Morgan Stanley and Goldman Sachs are the lead underwriters in a syndicate of 20 banks working on the deal. Proceeds will all go to the selling shareholder, a wholly owned unit of Bausch Health, according to the filing documents.

See also: Piano maker Steinway is going public again: 5 things to know ahead of its IPO

The company
BLCO,

had a net profit of $182 million in 2021 on revenue of $3.765 billion. That compares with the loss of $18 million on revenue of $3.412 billion generated in 2020.

Bausch + Lomb was founded in 1853 by John Jacob Bausch and Henry Lomb, and started as a small optical goods shop in Rochester, New York.

“Our mission is simple, yet powerful: helping you see better, to live better,” says the prospectus summary.

Bausch + Lomb makes contact lenses, intraocular lenses, medical devices, surgical systems, vitamin and mineral supplements, lens care products, prescription eye-medications and over-the-counter eye health consumer products.

It has about 4,200 employees at 24 facilities in 10 countries. Its research & development team number about 850 and they have introduced more than 260 new products since 2017.

See: IPO market outlook is ‘foggy’ heading into second quarter as falling returns at year-end and war in Europe dampens risk appetite

The company developed the world’s first soft contact lens, it launched one of the first contact lens cleaning products, introduced the first silicon hydrogel contact lens and brought a patented ocular vitamin to market, according to the prospectus.

The global eyecare market was worth nearly $50 billion in revenue in 2019, it said, and Bausch + Lomb is expecting it to grow at a compound annual growth rate of nearly 4% through 2025 to $63.2 billion.

That growth will be driven by factors including an aging global population, the rapid growth of a middle class in emerging markets, the increasing prevalence of diabetes and improving access to medical practitioners, among others.

The company is one of two that Bausch Health is spinning off as it works to reduce a massive debt burden taken on when it was called Valeant and went on a huge acquisition spree. The second is Solta Medical, which is Bausch’s skin care business.

Bausch Health has about $22.7 billion in long-term debt, according to FactSet.

Rounding out this week’s IPO calendar are two other deals, that of biotech PepGen and Austin Gold, according to Renaissance Capital.

PepGen
PEPG,
,
which is developing products aimed at treating neuromuscular and neurological diseases, is seeking to raise up to $108 million to fund clinical trials and develop its pipeline.

Austin Gold is a miner with properties in Nevada that is seeking to raise $13 million to fund exploration activities.

A handful of special-purpose acquisition corporations, or SPACs, may also price, according to Renaissance Capital, after joining the calendar let.

“Blank check issuance has been on a steady decline since the start of the year driven by poor post-merger returns, which have incited a wave of merger terminations and SPAC IPO withdrawals,” said the commentary.

The Renaissance IPO ETF
IPO,
-1.06%

is down 39% in the year to date, while the S&P 500
IPO,
-1.06%

has lost 14%.

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