Johnson & Johnson is reportedly preparing an investor roadshow to take its commercial healthcare unit public.
According to a Wall Street Journal (WSJ) report on Sunday (April 23), sources familiar with the matter say the company could begin meeting with investors as early as Monday (April 24) while preparing for an initial public offering (IPO ) prepared.
Sources tell the WSJ that the company hopes to raise at least $3.5 billion at a valuation of around $40 billion for Kenvue, its soon-to-be-spun-off consumer business that sells products like Tyleon, patches and skincare brands like Aveeno.
As the report notes, Johnson & Johnson’s attempt to list Kenvue will be a crucial test for the flagging IPO market. The WSJ cites figures from Dealogic showing that U.S. traditional IPOs have raised just $2.3 billion this year, the worst start to a year since 2009.
Last year was even worse, with prices at a 20-year low as investors, put off by inflation and high interest rates, shunned high-growth companies.
Meanwhile, companies already listed are also struggling, according to PYMNTS’ FinTech IPO Index, which monitors fintech returns since IPO.
As noted here last month, the index has posted a 51% loss over the past year, which roughly compares to the Global X FinTech ETF’s 52% decline, with IPO funding falling 68% over the same period.
“Of course, now that the SVB crisis and general banks’ nervousness are becoming more risk-averse as a result, it may become even more difficult for FinTechs to obtain funding,” PYMNTS wrote.
Another method of IPO, SPAC — Special Purpose Acquisition Company — has lost its pandemic-era luster, we wrote earlier this month, and now appears like “a relic of a bygone era.”
Two years ago the number of SPAC records totaled over 600, but late last year records were in the single digits by industry.
As PYMNTS reported last week, J&J CFO Joseph Wolk addressed the upcoming spin-off when the company reported its quarterly results.
“We remain focused on the successful separation of our consumer health business, Kenvue, which will make both companies more agile, focused and competitive,” said Wolk. “We also anticipate a number of pipeline advances that will boost confidence in our pharmaceutical and medical device businesses.”
He added that the company plans to complete the split this year, “assuming favorable market conditions.”
“Since the beginning of the year, we’ve operated our consumer health business as a company within the company,” Wolk added, noting that J&J has filed documents with the Securities and Exchange Commission for the proposed IPO.
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