Bausch + Lomb: eyecare IPO does not signal thaw in new listing market

In a poor year for new US listings, Bausch + Lomb should have offered a bit of cheer. The Canadian eyecare products maker successfully raised $630mn this week. That made it the second biggest initial public offering in 2022 after private equity firm TPG’s offering in January.

The listings market is having its slowest start in six years, with 32 companies raising a mere $3.6bn. That’s a far cry from the $56bn achieved this time last year, according to Refinitiv.

Investors should not rush to uncork the champagne just yet. The US equity capital market has not found its dancing shoes. Rising interest rates and a persistent stock market sell-off should continue to give IPO investors pause.

Indeed Bausch raised an amount well below the $840mn it has targeted. The contact lens maker priced its shares at $18, about a fifth below the midpoint of its target range. That price values the company at about $6.3bn. Worse, Bausch Health — formerly known as Valeant Pharmaceuticals — paid $2.4bn more for it back in 2013.

Bausch + Lomb is a storied household brand that made $182mn in net income on $3.8bn of revenue last year. The fact that a large, profitable business struggled to get its IPO across the line bodes poorly for all the list of lossmaking start-ups seeking to follow it on to the market.

Already prospective investors will have noted that the Renaissance Capital IPO index, which tracks issues for two years from their floats, has fallen more than 43 per cent over the past 12 months. Compare that with the S&P 500 index’s 2 per cent decline.

But even so, all those companies waiting in the wings need not fret. Another type of deal could follow. Plenty of money continues to slosh around in the private capital market. Venture capital firms currently sit on about​​ $478.5bn of dry powder at the end of the first quarter, according to consultants Preqin. That should enable start-ups seeking funding to wait out the market ruckus.