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Arc’teryx apparel brand owner Amer Sports is poised to raise 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, has discussed selling stock at $13 a share when it prices late on Wednesday, below its published target range of $16 to $18 a share, said two people close to the deal. At $13, the price would give the company an initial market capitalisation of $6.3bn.
That would make it the second large IPO this month to price below its target range, following KKR-owned healthcare group BrightSpring last week.
The company, majority owned by Anta Sports of China, is not expected to confirm pricing until Wednesday evening, and the final price could still change. Bloomberg first reported Amer was guiding investors that it would price below the target range.
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 signs of weak demand, Amer’s debut will nonetheless represent a milestone for the US listings market. It is still set to be 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 remain wary of backing any company with high debt levels, and insisting on substantial valuation discounts to back such deals.
One senior IPO banker said: “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?”
Rating agency Moody’s last week said it expects 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.