Bausch & Lomb, the eyecare unit of the company formerly known as Valeant Pharmaceuticals, priced its initial public offering below its target range as volatile markets put pressure on the second-largest listing of the year.
The company, which was aiming to raise up to $840mn, on Thursday evening announced that it would sell shares at $18 per share, below its $21 to $24 per-share target.
Market volatility caused by rising interest rates and Russia’s war in Ukraine has caused a sharp drop in US listings this year, with just $3.3bn raised, compared with more than $56bn in the same period in 2021, according to Dealogic data.
Gas group Excelerate successfully raised $384mn last month, although it benefited from a uniquely positive environment for energy companies. Observers have been closely watching Bausch’s prospects as a more representative test of investor appetite.
Bankers were hoping the long record of profitability for Bausch & Lomb, which began as an upstate New York optical goods store in the 19th century, would stand it in good stead. However, the planned IPO coincided with a sharp reversal in the broader stock market. Wall Street’s benchmark S&P 500 index slid 3.5 per cent on Thursday.
Bausch & Lomb reported revenues of $3.8bn in 2021, up 10 per cent from 2020, but roughly flat compared with 2019. Net income was $193mn, though its profits will fall as it inherits some debt as part of the separation from its parent company.
Valeant spent $8.7bn to buy Bausch & Lomb from private equity group Warburg Pincus in 2013, when it was on a long acquisition spree. The Canadian company later rebranded as Bausch Health after a string of scandals over predatory pricing and accounting irregularities.
Bausch Health will remain a majority shareholder in Bausch & Lomb after the deal. It has said it intends to sell or distribute its stake to shareholders, though the newly independent company cautioned in its prospectus that its parent had “no obligation” to complete the distribution.
The prospectus also highlighted Bausch & Lomb’s exposure to the war in Ukraine. It generated $116mn of revenue in Russia last year, as well as smaller amounts in Ukraine and Belarus, and said it faced risks including lower demand, potential future sanctions, state-sponsored cyber security attacks and reputational damage from continuing to operate in the region.
