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Public Investors Eager For IPOs Lure Private Chemical Firms

Business: Stock markets worldwide are friendly environment, but it likely won’t last

by Michael McCoy
April 11, 2014 | APPEARED IN VOLUME 92, ISSUE 15

Investors who bought chemical IPOs in 2013 have done well.

a. Market close on Apr. 10.

SOURCES: Companies, Yahoo Finance
Investors who bought chemical IPOs in 2013 have done well.

a. Market close on Apr. 10.

SOURCES: Companies, Yahoo Finance

Initial public offerings, or IPOs, of stock are on the rise across the globe, and chemical companies are getting in on the action.

The latest chemical maker to announce plans to sell stock in an IPO is Orion Engineered Carbons. With sales last year of about $1.8 billion, Orion is one of the world’s largest producers of carbon black, a form of carbon that is added to tires and other rubber goods to improve abrasion resistance.

Orion is owned by the private equity firms Rhône Group and Triton Advisers, which acquired it from the German chemical giant Evonik Industries in 2011 for more than $1.2 billion. Rhône and Triton say they expect the IPO to happen later this year.

Germany-based Orion joins the U.S. firms Trinseo and PQ Corp. in seeking to sell shares. Trinseo, a producer of styrenic and polycarbonate plastics, filed to go public last month after abandoning an attempt last year. PQ, which makes silicates and other inorganic materials, filed for its IPO in February.

These chemical companies are looking to start trading in what is now a heady market for IPOs. In the first quarter of 2014, 244 companies around the world went public in IPOs that raised $47.7 billion, according to the business information firm Thomson Reuters. In the same period last year, 139 companies held IPOs, raising $23.8 billion.

The Thomson Reuters figures for chemical and petrochemical companies are also up: Six firms launched in the first quarter, compared with two in the year-ago period. About $1 billion was raised in each quarter.

Telly Zachariades, a principal at the Valence Group, a financial adviser for the chemical industry, says private equity firms are taking their chemical businesses public in part because the stock market is valuing them more highly than other potential private equity or corporate owners are.

But Zachariades doesn’t expect the current IPO boom to last too long. Typically, he says, chemical companies successfully go public during a limited window when the industry is on an upswing, as it is now in the U.S. and Europe, rather than at a peak or a trough. “At some point this window will close,” he says.



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