Reynolds wrap maker soars after raising $1.2 billion in IPO

Bloomberg

Reynolds Consumer Products Inc, the maker of Reynolds Wrap aluminum foil and Hefty trash bags, rose 9.8% in its trading debut after raising $1.23 billion in the biggest initial public offering by a household goods maker.
Reynolds, backed by New Zealand billionaire Graeme Hart’s Rank Group, sold 47.17 million shares for $26 each after marketing them for $25 to $28. The company’s shares closed trading on January 31 at $28.55, giving the company a market value of $5.78 billion.
The offering is the first billion-dollar US listing of the year, as well as an unusual debut for a household goods maker. The IPO is the largest ever by a company in that niche, topping the 2014 Brussels listing by soap maker Ontex Group NV that raised 596 million euros ($661 million) including the so-called greenshoe shares, according to data compiled by Bloomberg.
“What’s attractive to investors about our company is steady proven growth over a long period of time,” Reynolds Chief Executive Officer Lance Mitchell said. “We have a very consistent, durable demand and investment thesis that’s compelling.”
The Reynolds listing is the biggest test so far this year of investor interest. 1Life Healthcare Inc, a provider of tech-driven primary care clinics under the One Medical brand, rose 58% in its trading debut after pricing its shares at the bottom of a marketed range to raise $245 million.
Drug and biotech research services provider PPD Inc is seeking to raise as much as $1.62 billion in its IPO this week. Casper Sleep Inc, one of the leading brands in the so-called bed-in-a-box industry, also plans to go public, with a goal of raising $159 million.
The offerings follow last year’s tech-related IPO surge, led by Uber Technologies Inc’s $8.1 billion offering, that gave way to a largely disappointing second half.
Peloton Interactive Inc dropped in its trading debut in September, the same month as WeWork’s share-sale plans
were officially withdrawn after its spectacular flop. Canadian waste management firm GFL Environmental cancelled an IPO that targeted $2.1 billion.
Reynolds, based in Lake Forest, Illinois, was formed by Rank Group in 2010, primarily through a consolidation of the earlier Reynolds and Hefty businesses with Presto brands. Unlike many of the so-called unicorns that went public last year, Reynolds is profitable. For the nine months ended on Sept. 30, it had net income of $135 million on revenue of $2.1 billion, according to its filings.
The company’s products are used in 95% of US households, according to its filings. Hefty trash bags and related wares accounted for about 39% of its sales in 2018, followed closely by cookware goods including Reynolds foil, which was first sold in 1947 and has 64% of the US market share. Hefty tableware, including disposable cups and cutlery, made up the remaining 24% of revenue.
Reynolds said it plans to grow through improved operational efficiency and through innovation, aiming to generate 20% of its revenue each year from products introduced within the previous three years. The company is also focussing on goods made with recycled, renewable, recyclable and compostable materials, according to its filings.