IPL Plastics looks to IPO on Thursday as rivals’ shares slump

Dublin-based IPL Plastics, formerly known as One51, plans to price the $150 million (€97.6 million) worth of shares being issued in its initial public offering (IPO) on Thursday, according to sources, even as shares in peers and markets have fallen in recent days.

Shares in London-listed rival RPC have slumped by 7.3 per cent so far this week, bringing its decline since the start of June to 18 per cent, as investors looked beyond a solid set of full-year figures from the group to fret about a European Commission plan to ban the use of single-use plastic products.

US plastics company Berry has also been out of sorts recently, falling more than 4 per cent since IPL Plastic's management, led by chief executive Alan Walsh, embarked on the IPO road show on June 4th. Global equity markets have also been rattled since late last week by fears of a trade war between the United States and China.

While market sources said that the share sale promotion for IPL, which makes everything from ice-cream containers to refuse bins and generates most of its earnings in North America, is being well-received, the company and its brokers will be conscious of the market backdrop when setting the IPO price.

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Fresh money

IPL, advised by BMO Capital Markets, CIBC and Royal Bank of Canada, said on May 22nd that it expected the shares to float at a range between 13.5-16 Canadian dollars per share, which points to a market value on flotation of up to 811.8 million Canadian dollars, including the fresh money being raised.

It was founded in 2005 as an investment company spun out of agri group IAWS (now part of Aryzta) and chief executive Alan Walsh has spent the last six years trying to reshape the business. Having sold down One51's collection of investments, including a stake in Irish Continental Group and Irish Pride Bakers, the company is now focused on rigid plastics.

In a trading statement issued in an updated IPO prospectus published at the start of the month, IPL said its earnings before interest and tax (ebit) declined to $6.8 million in the first quarter from $8.2 million for the year-earlier period, even as revenue jumped to $148m from $112.5 million.

North America-focused IPL Plastics had already highlighted last month that its profit margins remained under pressure in the first quarter of 2018, having been squeezed in the second half of last year as raw material resin prices spiked and US freight costs increased amid tougher rules on truck driving times.