WE Soda blames ‘cautious investors’ for abandoning $7.5bn London IPO

Hum Soda has abandoned plans for a $7.5 billion London initial public offering in a fresh blow to UK equity capital markets, which have struggled to attract marquee listings in recent years.

The UK-based group, which is the world’s largest natural soda ash producer, blamed the decision on “excessive investor caution in London” which prevented it from achieving the valuation it sought.

In a statement on Wednesday, Alasdair Warren, chief executive of V Soda, said that “investors, particularly in the UK, remain extremely cautious about the IPO market”.

WE Soda, which has two production sites in Turkey and had planned to become a “big fish” in London’s relatively small capital market, scrapped its plans after it found that the market was paying almost 30 percent less than expected. wanted to do. According to three people familiar with the matter.

Soda ash is used in industrial processes such as glass production, and is an ingredient in products ranging from batteries to detergents.

The listing of the company, which is controlled by Turkish media and industrial mogul Turge Ciner, was to be the UK’s biggest flotation in 2023, with the group hoping to join the FTSE 100.

However, a person familiar with the matter said senior company executives had discussed mishandling with investors, raising concerns about management holding zero shares in the group. Prior to joining V Soda, Warren worked as a senior capital markets banker at Goldman Sachs and Deutsche Bank in London.

This question is an issue of caution in terms of IPO market and for that caution what discount they ask for

V Soda’s decision to withdraw from its UK IPO is the latest blow to London’s equity market, which has struggled in recent years as larger companies chose to list on bigger venues such as Wall Street. There were only four London listings in the first quarter, raising only £81 million, the sixth worst quarter for IPOs in the UK capital since 1995.

London has suffered from other large industrial companies pulling their listings in recent years due to turbulent market conditions. In 2021, private equity group Advent explored taking factory parts supplier Roubaix public in London, raising €850 million before scrapping plans.

Meanwhile, chip designer Arm rejected the government’s appeal to list in Britain and CRH, the world’s biggest building materials group, plans to switch its listing to Wall Street.

The collapse of the WE Soda listing is a blow to Rishi Sunak’s ambitions to improve London’s reputation as a destination for big IPOs.

But government officials insisted the decision was not a major blow to the city’s reputation, pointing out that most major markets have had periods of low issuance in recent months.

A banker familiar with the WE Soda process said investors were unwilling to buy at the price the company was looking for, despite a generous offer to pay a dividend of more than $500 million.

“The transaction was possible but at a price level where the owner was not going to do it,” said the person. “We shouldn’t write off the entire IPO market, but it’s tough.”

Warren told the Financial Times on Tuesday that the company had received “massive” interest by holding around 300 investor meetings.

He said V Soda faced three challenges with investors: poor IPO market conditions, poor understanding of the soda ash industry and convincing them of the sustainability of its margins in the coming years.

“The question is the issue of caution in the context of the IPO market and what exemptions they seek for that caution,” he said.

Additional reporting by Jim Pickard

Hum Soda has abandoned plans for a $7.5 billion London initial public offering in a fresh blow to UK equity capital markets, which have struggled to attract marquee listings in recent years.

The UK-based group, which is the world’s largest natural soda ash producer, blamed the decision on “excessive investor caution in London” which prevented it from achieving the valuation it sought.

In a statement on Wednesday, Alasdair Warren, chief executive of V Soda, said that “investors, particularly in the UK, remain extremely cautious about the IPO market”.

WE Soda, which has two production sites in Turkey and had planned to become a “big fish” in London’s relatively small capital market, scrapped its plans after it found that the market was paying almost 30 percent less than expected. wanted to do. According to three people familiar with the matter.

Soda ash is used in industrial processes such as glass production, and is an ingredient in products ranging from batteries to detergents.

The listing of the company, which is controlled by Turkish media and industrial mogul Turge Ciner, was to be the UK’s biggest flotation in 2023, with the group hoping to join the FTSE 100.

However, a person familiar with the matter said senior company executives had discussed mishandling with investors, raising concerns about management holding zero shares in the group. Prior to joining V Soda, Warren worked as a senior capital markets banker at Goldman Sachs and Deutsche Bank in London.

This question is an issue of caution in terms of IPO market and for that caution what discount they ask for

V Soda’s decision to withdraw from its UK IPO is the latest blow to London’s equity market, which has struggled in recent years as larger companies chose to list on bigger venues such as Wall Street. There were only four London listings in the first quarter, raising only £81 million, the sixth worst quarter for IPOs in the UK capital since 1995.

London has suffered from other large industrial companies pulling their listings in recent years due to turbulent market conditions. In 2021, private equity group Advent explored taking factory parts supplier Roubaix public in London, raising €850 million before scrapping plans.

Meanwhile, chip designer Arm rejected the government’s appeal to list in Britain and CRH, the world’s biggest building materials group, plans to switch its listing to Wall Street.

The collapse of the WE Soda listing is a blow to Rishi Sunak’s ambitions to improve London’s reputation as a destination for big IPOs.

But government officials insisted the decision was not a major blow to the city’s reputation, pointing out that most major markets have had periods of low issuance in recent months.

A banker familiar with the WE Soda process said investors were unwilling to buy at the price the company was looking for, despite a generous offer to pay a dividend of more than $500 million.

“The transaction was possible but at a price level where the owner was not going to do it,” said the person. “We shouldn’t write off the entire IPO market, but it’s tough.”

Warren told the Financial Times on Tuesday that the company had received “massive” interest by holding around 300 investor meetings.

He said V Soda faced three challenges with investors: poor IPO market conditions, poor understanding of the soda ash industry and convincing them of the sustainability of its margins in the coming years.

“The question is the issue of caution in the context of the IPO market and what exemptions they seek for that caution,” he said.

Additional reporting by Jim Pickard