South Carolina based company Diversey recently announced that it is aiming for a $6.38 billion valuation for its initial public offering in the U.S.

Diversey manufactures cleaning and hygiene products and is currently backed by Bain Capital, the famous Boston based private investment fund co-founded by Republican leader Mitt Romney. Diversey currently sells a bulk of its products to institutional and food and beverage markets and is looking to expand into other sectors. The company aims to sell 46.2 million shares priced between $18-$21 per share, thereby raising $970 million with the offering. Underwriters will be allowed a 30-day option to purchase over 6.9 million additional shares at the same price.

Following the offering, investment funds controlled by the private equity owner will hold about 77.4% of the company’s outstanding shares, or 75.7% if the over allotment option is fully exercised.

The offering will be made using the traditional prospectus-only method. The company’s official registration statement has been filed with the SEC and is currently up for review.

Major Wall Street retail banks Citigroup, Morgan Stanley, Barclays and J.P Morgan have been appointed as the lead book-running managers for the deal. Siebert Williams Shank has been appointed as the co-manager. Other major banks involved in the deal include BofA Securities, Credit Suisse, Goldman Sachs & Co. LLC, Jefferies, RBC Capital Markets, UBS Investment Bank, Baird and Guggenheim Securities.

About Diversey

Diversey is a heritage American company founded almost a hundred years ago in 1923 by August Kochs. It was originally started as a specialty subsidiary to Victor Chemical Works, the Kochs’ Chicago based industrial cleaner business. The company then began operations as a separate entity after holding a public offering of over 143,000 shares in 1950. The company was then acquired and subsequently sold by a number of parent organisations, the latest being Romney’s Bain Capital.

Bain acquired Diversey in 2017 from Sealed Air Corp for about $3.2 billion. Shortly after this, the firm also acquired Northampton, UK-based Zenith Hygiene Group, which was then merged with Diversey.

Diversey manufactures highly specialised cleaning products for a large number of food and sanitation organisations based both in and outside the U.S. It also provides innovative cleaning solutions to a number of private and public healthcare organisations in the country. The company currently hires over 8,600 full time employees including 1,400 technicians that help it serve 85,000 customers in over 80 countries across the globe.

While Diversey has reported losses every year since Bain bought it, it booked an impressive $2.6 billion in sales in 2020 amid production issues caused by the coronavirus pandemic. This healthy sales performance is expected to help the company get more investors on board and possibly see a rise in its share price after its IPO goes live this week.

Analysis

The American IPO market has seen a lot of activity this year, with more American and international firms choosing to list in the country than ever before.

The SEC’s investor-friendly rules and easier listing options have attracted a number of budding startups to the country in recent years. NYSE’s 2021 portfolio contains promising companies of every kind from up and coming health-tech organisations like: Oscar Health and SoftBank-backed foreign retail giants like Coupang. Heritage companies that have avoided any major public offerings for about a century, like Diversey, have changed course. For these companies, a lucrative NYSE listing translates to a huge inflow of cash that they can use to expand into different markets and dominate their existing markets.

A lot of these companies have reported losses in 2020 despite seeing unparalleled sales figures owing to the large sums of money invested in the development of new products and services. Diversey will be looking to capitalise on this opportunity and take on large corporations like Procter & Gamble that currently dominate the market.