May begins with a big IPO in focus. Bausch + Lomb Corp. (BLCO proposed), the global eye care company, is going public this week with an IPO likely to raise $787.5 million – making it the second-biggest IPO of 2022. Only TPG, Inc. (TPG), the private equity king, was bigger – with its $1 billion IPO on Jan. 13, 2022.
The big banks are back in force with the Bausch + Lomb deal. Morgan Stanley, Goldman Sachs, Citigroup, J.P. Morgan, Barclays, BofA Securities, Guggenheim Securities, Jefferies, Evercore, Wells Fargo Securities and Deutsche Bank Securities are the joint book-runners.
Bausch + Lomb, whose products range from contact lenses and eye drops to prescription drugs and implantable lenses for cataract surgery, is going public through a spin-off off by Bausch Health Companies Inc. (BHC)
“This is a big brand,” a veteran IPO trader says. “And big brands go a long way to attract interest. This is a highly anticipated deal, to say the least. We haven’t had a deal like this in months.”
All 35 million shares in this IPO are being offered by the selling stockholder, 1261229 B.C. Ltd., a wholly owned subsidiary of Bausch Health Companies. None of the IPO proceeds will go to Bausch + Lomb. Based in Vaughan, Canada, Bausch + Lomb is planning a dual listing on the New York Stock Exchange and the Toronto Stock Exchange.
If the IPO is priced at the $22.50 mid-point of the $21-to-$24 range, Bausch + Lomb would have a market valuation of about $8 billion. The IPO is set for pricing Thursday night, May 5, to trade Friday, May 6.
Beyond the power of its brand, Bausch + Lomb is profitable – swinging to a profit of $193 million for the year ended Dec. 31, 2021, from a net loss of $17 million a year earlier. The vision care company’s revenue for 2021 was about $3.77 billion, up about 10.6 percent from the previous year.
At the closing of the IPO, Bausch + Lomb will take on about $2.5 billion in debt transferred from the parent, Bausch Health Companies.
Major competitors of Bausch + Lomb include Johnson & Johnson Vision Care, Novartis, Alcon and Allergan.
“The only thing that could derail this, in my opinion, is if the stock market keeps taking big dives,” the veteran IPO trader says.
That’s a big “if” following Friday’s freefall. The Nasdaq Composite Index lost 4.2 percent on Friday, ending down 13 percent for April – its worst month since October 2008 – as investors unloaded tech stocks on fear of a recession, stirred by disappointing earnings, surging inflation and rising interest rates. The Nasdaq is down 21 percent so far in 2022, its worst start to a year on record, according to The Wall Street Journal.
April’s Swan Song
HilleVax (HLVX) went public on Friday, April 29, 2022, the final trading day of a chilly month. The vaccine maker’s stock opened at $18.76, up 10.4 percent from its $17 IPO price. HilleVax closed its first day of trading on the NASDAQ at $19.09, up 12.29 percent on volume of 2.34 million shares.
Based in Boston, HilleVax is developing a vaccine to prevent acute gastroenteritis, a serious and sometimes fatal illness caused by infection with the norovirus.
HilleVax raised $175 million in its IPO of just 10.294 million shares.
J.P. Morgan, SVB Leerink, Stifel and Guggenheim Securities were the joint book-runners of the HilleVax IPO.
Belite Bio (BLTE) scored a moonshot on Friday (April 29) – jumping to $12.50 at the opening, or more than doubling its $6 IPO price. A moonshot occurs when an IPO gains 100 percent (double) or more from its IPO price on the opening day.
Belite Bio’s dazzling first trade was in keeping with the recent trend of micro-caps and moonshots. JE Cleantech (JCSE), Ostin Technology (OST) and Tenon Medical (TNON) are all examples of this trend, spotted during the last two weeks of April. But it’s a case of caveat emptor. What goes up like a rocket can just as quickly fall to earth. Ostin Technology is a case in point, as Barron’s noted.
To recap Belite Bio’s debut on Friday: The stock soared as high as $17.50 before cooling off slightly to close its first day of trading on the NASDAQ at $10.59, up 76.5 percent from its $6 IPO price, on volume of 3.43 million shares.
The clinical biopharmaceutical company, which is targeting untreatable eye diseases, priced its small-cap IPO of only 6 million shares at $6, the mid-point of its $5.50-to-$6.50 price range. Belite Bio’s parent and principal stockholder, Lin Bioscience International Ltd., agreed to buy $15 million of the stock – American Depositary Shares (ADS) – in the IPO, the company said.
Belite Bio, based in San Diego, is developing an oral once-a-day drug in clinical trials in Australia and Taiwan to treat Stargardt disease, an autosomal recessive disease that can cause blindness. The company is also targeting age-related macular degeneration, also known as dry AMD, a leading cause of blindness in elderly people.
In April’s final week, three SPAC IPOs were priced, with bankers raising a total of $245 million: Aimfinity Investment Corp. I (AIMAU), $70 million; Chenghe Acquisition Co. (CHEAU), $100 million, and ClimateRock Acquisition Corp. (CRCLU), $75 million.
On the flip side of the SPAC ledger, about $1 billion of SPAC IPOs were withdrawn last week, SEC filings showed.
Looking Ahead
A handful of small-cap IPOs and SPACs may get priced this week. But nothing was set in stone ahead of the weekend.
The IPO traffic will depend on the performance of the overall U.S. stock market.
Stay tuned.
(For more information about these companies, please check the IPO Calendar on our website. Click on a company’s name and the hyperlink will take you to the IPO Profile, which includes a link to the prospectus.)
Note: Never trade on proposed symbols. They have been known to change and you might buy something on the OTC Bulletin Board.
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Disclaimer: A SCOOP Rating (Wall Street Consensus of Opening-day Premiums), is a general consensus taken, at press time, from Wall Street and investment professionals concerning how well an IPO might perform when it starts trading. The SCOOP Rating does not reflect the opinions of anyone associated with IPOScoop.com. The SCOOP ratings should not be taken as investment advice. The rating merely reflects the opinion of the professionals at the time of publication and is subject to last-minute changes due to market conditions, changes in a specific offering and other factors, such as changes in the proposed offering terms and the shifting of investor interest in the IPO. The information offered is taken from sources we believe to be reliable, but we cannot guarantee the accuracy.