The Antwerp chemical distributor Azelis wants to raise almost 900 million euros with its IPO. The money must be used to reduce debts and make acquisitions. The company benefited from the demand for cleaning agents during the pandemic and is also reaping the benefits of the renovation boom.
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Azelis, which purchases chemical substances from major producers and then distributes them to the most diverse customers, confirms Monday that it plans to raise 880 million euros by issuing new shares through an IPO on Euronext Brussels. The operation is expected to be launched this month.
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With this, the group, with headquarters in Antwerp, is the largest stock exchange operation since Bpost eight years ago moved to Brussels. But unlike Bpost, Azelis primarily targets large institutional investors. Small investors can only trade in shares of the chemical distributor if the share is already on the stock exchange. They cannot pre-register.
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Azelis is a stock market clapper in the making, but the name does not ring a bell with few people. However, the chemicals that Azelis distributes can be found in the most diverse cases. For example, the company supplies the ingredients that make your veggie burger juicier and your cake creamier. But Azelis also supplies substances that end up in sun cream or detergent.
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Azelis: from Smurf ice cream to creamy cake
Azelis is not known to the general public, but there is a good chance that almost every Belgian comes into direct contact with one of the 2,200 chemical products that the Antwerp company distributes to 45,000 customers on a daily basis. From the coloring for the Smurf ice cream to substances that make a cake creamy to the laundry products that remove the inevitable traces of that ice cream and that cake on your clothes. A portrait.
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‘We mainly supply fine and specialty chemicals’, says CEO Hans Joachim Müller in a conference call following the IPO. ‘So we are not pure raw materials players. We work together with 2,200 partners. We distribute their products among more than 45,000 customers. We also enrich these products in about 60 laboratories worldwide.’
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Second try
EQT is now working with the Canadian federal pension fund PSP of the IPO to sell part of its shares. ‘As a shareholder, EQT has been able to boost our growth in a number of areas,’ says Müller. ‘We are now mature enough as a company to take the step to the stock exchange.’
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Because Azelis has not yet published a prospectus, we are still waiting for the financial details of the stock exchange operation. But when it announced its stock market plans on Monday, the company already indicated that the 880 million euros it hopes to raise will serve to cap the debt mountain of 1.6 billion euros and to make acquisitions.
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Takeover machine
‘We operate in a very fragmented business, with thousands of players worldwide’, says Müller. ‘But it is becoming increasingly difficult for smaller companies in the industry to adapt to the stricter regulations and requirements regarding sustainability. We do have the scale for that.’
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Müller emphasizes that this situation offers the company buying opportunities worldwide. But most of the growth seems to be in Asia these days, where we closed most of our deals in recent months. That region is interesting, not only because of the large population, but also because that population also consumes more.’
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Partly due to the longer series of acquisitions, Azelis’ turnover reached 2.2 billion euros at the end of last year. Gross profit grew 13 percent in the past four years and adjusted operating profit before depreciation and amortization increased 16 percent last year, the company says.
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‘We have been growing faster than the global economy for some time now,’ says Müller. ‘Despite corona, we experienced strong growth last year. The ‘life sciences’ branch (food, animal feed, pharmaceuticals, cleaning products… ed.), which represents 60 percent of our revenue, was doing very well at the time. For example, also due to the sharply increased demand for disinfectants. Today that branch is still growing, albeit less markedly than last year. This also applies to our activities in foodstuffs. But that is amply compensated by the renovation boom, as a result of which we see an increase in the demand for products for paint coatings, for example. Either way, it’s not a bad business to be in,” Müller laughs.
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Booming on the stock market
Investors in Azelis’ competitors who are listed on the stock exchange today are also aware of this. Due to the rapid reopening of the economy, the demand for chemical products has exploded, for example from the automotive sector.
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The Dutch Azelis rival IMCD
saw turnover increase by a fifth over the first half of the year. Operating profit increased by almost half. The German Brenntag turned a fifth more profit on a turnover that went up a tenth.
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The record results translate into record prices on the stock market (see chart). Since the low point in March 2020, at the start of the pandemic, the stock market value of IMCD has risen from less than 3 to almost 10 billion euros. Brenntag, which also has a branch in Deerlijk, went from 5 to 13 billion euros and will soon translate that boom into a seat in the expanded German star index DAX.
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