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Arc’teryx apparel brand owner Amer Sports raised less money than hoped in the largest US initial public offering since October, in the latest sign of investor caution amid a tentative reopening in the market for new listings.
Amer, which also produces Wilson tennis rackets and Salomon skis, said it had agreed on Wednesday to sell 105mn ordinary shares at $13 a share, below its published target range of $16 to $18 a share.
The stock climbed 3.5 per cent shortly after it started trading on Thursday afternoon to $13.46, but remained well below the original target range.
The sale raised about $1.37bn and gave Amer an initial market capitalisation of $6.3bn.
It is the second large IPO this month to price below its target range, following KKR-owned healthcare group BrightSpring last week.
One person working on the Amer deal said both it and BrightSpring had been affected by investor caution towards companies with significant debt levels. BrightSpring sold stock more than 10 per cent below the bottom of its original price range, and shares in the company tumbled a further 15 per cent on the first day of trading.
Amer had outstanding loans of more than $5.5bn at the end of September 2023. It reported a net loss of $114mn in the first nine months of 2023. Its preferred adjusted measure of earnings before interest, tax, depreciation and amortisation was $422mn over the same period. Amer plans to use the proceeds of the IPO to pay down some debt.
Despite the weak demand, Amer’s debut represents a milestone for the US listings market. It is still the largest fundraising since Birkenstock last October and the largest IPO by a China-owned company since the disastrous listing of ride-hailing group DiDi in 2021.
A stock market recovery and expectations that the US Federal Reserve will soon start cutting interest rates have raised hopes that IPO activity will finally pick up after a two-year slowdown. High-profile groups such as social network Reddit have resumed talks with investors after putting earlier listing plans on hold.
However, several bankers and traders said investors remained wary of backing any company with high debt levels and were insisting on substantial valuation discounts to back such deals.
“There has been some debate with [companies and investors] around how do you get bigger assets to market, how do you . . . get leverage to a level public markets will be happy with?” said one senior IPO banker.
Rating agency Moody’s last week said it expected Amer’s adjusted debt-to-ebitda ratio to decline to about four times after the IPO.
“Moody’s expects that Amer Sports, as a publicly listed company, will pursue a more conservative and transparent financial policy,” it added.