Shares of Apotex Health Corp. rose during their first morning of trading, a sign of solid investor support for the drug manufacturer’s billion-dollar initial public offering.
Apotex initially set out to raise $1-billion and hoped to price its shares between $20 and $24 apiece, but the Toronto-based company saw so much investor demand for the IPO that it increased the deal size to $1.3-billion and priced the shares at $24, or the top end of the range.
Apotex’s shares started trading Wednesday morning and rose 12 per cent to $26.85 by mid-day on the Toronto Stock Exchange, suggesting that even more investors are trying to get their hands on its shares. The strong trading debut unfolded on a day when the S&P/TSX Composite Index slipped 0.3 per cent and major U.S. indices were down around one per cent, extending their recent slides.
Because Apotex increased the size of its IPO, the company’s private equity backer, SK Capital Partners LP, and other private shareholders were able to sell more stock. Initially, they planned to sell $150-million worth of shares in the offering, but are now selling $450-million.
The remaining $850-million raised will flow to Apotex’s coffers, and the company will use the money to pay down debt.
The larger deal size, referred to on Bay Street as upsizing, is a positive sign for Canada’s capital markets, which have struggled to attract IPOs in recent years. A flurry of technology companies went public early in the COVID-19 pandemic, but many saw their share prices drop sharply after listing – and a number have since been sold to private equity firms at depressed valuations.
The Apotex IPO is the largest in Canada since Definity Financial Corp., an insurer, went public in a $1.4-billion share offering in 2021.
Toronto-based Apotex was founded in 1974 by the late Barry Sherman and made its name by producing generic versions of drugs that had lost their patents. Mr. Sherman was famously litigious, fighting court battles over drug patents with major pharmaceutical companies and generic rivals. The company now has more than 6,500 global employees churning out 25 billion doses of medicine each year and selling in 70 countries.
In its latest fiscal year, 45 per cent of Apotex’s sales came from Canada, 46 per cent came from the United States and the rest were international. The company marketed its IPO as a way for investors to capitalize on multiple developments, including the growing prevalence of chronic diseases, and an aging global population that will create more demand for health care products.
SK is selling some of its stake through the IPO but will remain a major owner of the drug manufacturer.
