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Vaccitech slides in US stock market debut

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Vaccitech, the company that owns the technology behind the Oxford/AstraZeneca coronavirus vaccine, slid in its public market debut on Friday, following recent concerns about rare side-effects from the jab and growing investor scepticism over high valuations in the biotech sector.

The company’s shares started trading at $13.62 on the Nasdaq, almost 20 per cent lower than the offer price Vaccitech set on Thursday. The biotech company raised $111m from the initial public offering.

In early trading, Vaccitech was valued at about $464m, still above the $425m set by its last private fundraising in March.

Vaccitech was co-founded by University of Oxford scientists Sarah Gilbert and Adrian Hill in 2016 and has been backed by private investors including Tencent, Google Ventures and Californian biotech Gilead Sciences.

The company owns the technology used to create the AstraZeneca vaccine and will receive 1.4 per cent of net revenues if the vaccine is sold on a for-profit basis after the pandemic. It is also working on another Covid-19 vaccine that could be used as a booster for those who received the AstraZeneca shot.

The rapid scale-up of the AstraZeneca vaccine has helped prove the company’s adenovirus-based platform and generated data from its use in millions of people. Vaccitech is developing the technology for other vaccines, for diseases including the coronavirus Mers and shingles.

Bill Enright, Vaccitech’s chief executive, said the company was going public now to take advantage of how Covid-19 had made its work visible.

“As they say in biotech, take money when it’s available,” he told the Financial Times.

But Vaccitech’s “real focus” was therapeutics, he said, with an early clinical trial of a lung cancer drug due to start in the middle of this year, as part of a collaboration with Cancer Research, and data expected from its programme to treat chronic human papillomavirus in the next year.

Shares in listed vaccine makers have soared during the pandemic. Novavax is up over 1,300 per cent, while Moderna and BioNTech are both up about 380 per cent over the past 12 months.

That has attracted several companies connected to Covid-19 vaccine development to tap public markets. CureVac shares rose 249 per cent on its first day of trading in August. Valneva, a French listed vaccine maker, also recently filed for a US IPO.

Some investors have grown cautious over lofty valuations in the biotech sector, however. The Nasdaq biotech index is down more than 10 per cent from its February peak after gaining more than 25 per cent in 2020. Short-sellers have poured into the sector, with Novavax and Moderna among the 10 most heavily shorted biotech companies, according to data from S3.

Vaccitech is going public after a period of intense scrutiny for the Oxford/AstraZeneca vaccine regarding concerns about a very rare blood clotting side-effect. The company warned in its IPO prospectus that the side-effect could hit royalties and affect the reputation of its products.

Susannah Streeter, a senior analyst at Hargreaves Lansdown, said the speed of innovation in vaccines had been “breathtaking”, and that Vaccitech was one of the companies leading the charge.

“The crisis has shown Vaccitech can effectively scale up a successful project at speed, which is quite unusual for a biotech start-up, which often launch on to a stock market without such a proven track record,” she said.

Morgan Stanley, Jefferies, Barclays and William Blair led the offering.

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JD.com’s logistics arm seeks to raise up to $3.4bn in Hong Kong IPO

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JD Logistics, the delivery unit of Chinese ecommerce group JD.com, will seek to raise up to $3.4bn in what would be one of Hong Kong’s largest initial public offerings this year.

The company’s decision to list follows a boom in online shopping during the coronavirus pandemic. But a tougher regulatory environment for Chinese technology groups and a recent fall in the shares of SF Holding, one of JD Logistics’ largest competitors, pushed the company’s proposed IPO price down by about a quarter, according to a person close to the deal.

JD Logistics will sell 609.2m shares at HK$39.36-HK$43.36 ($5.07-$5.58) each. The final price will be set on Friday and the shares are expected to start trading on May 28, according to terms of the deal seen by the Financial Times.

The IPO would be the second largest in the city this year after Kuaishou, a Chinese viral video app, raised $5.4bn in February, and would be the third blockbuster listing by JD.com in Hong Kong in the past year. JD Health, which sells pharmaceutical and healthcare services online, completed a $4bn IPO in December and JD.com carried out its own secondary listing in the territory last June, which raised a similar amount.

Hong Kong has benefited from a flood of high-profile listings by Chinese technology companies in recent months and has hosted more than $20bn of IPOs this year, according to data from Bloomberg.

JD.com created its logistics and delivery arm in 2007 and spun it out into a standalone unit a decade later. The company operates more than 900 warehouses in China and provides delivery and warehousing services to third parties.

But the group is among those under pressure as China increases scrutiny of its largest internet groups. Last month, officials told 13 of the country’s biggest tech companies, including fintech subsidiaries of JD.com, Tencent and ByteDance, to “rectify prominent problems” on their platforms. The push was seen as a sign that regulatory focus on the sector was spreading beyond Jack Ma’s Ant Group, after the $37bn IPO of the fintech company was scuppered last November.

Separately, shares in SF Holding, China’s largest listed delivery company, fell sharply last month after a quarterly loss rattled investors and prompted scrutiny over the high valuations placed on Chinese companies.

“Competition in China’s logistics space is fierce, especially after [Indonesian company] J&T Express entered the market, which has had an impact on other logistics companies’ performance and will hit JD,” said Li Chengdong of Haitun, an ecommerce think-tank.

JD Logistics was initially the delivery arm of JD.com’s ecommerce site but an increasing portion of its business comes from ferrying packages on behalf of third parties.

Cornerstone investors in the JD Logistics IPO, including technology group SoftBank’s Vision Fund, Temasek Holdings, Singapore’s state-backed investment company, and investment firms Tiger Global and Blackstone have subscribed to about $1.5bn of the shares, according to the terms of the deal.

Bank of America, Goldman Sachs and Haitong International are the joint sponsors for the listing.

Additional reporting by Ryan McMorrow in Beijing

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Volvo Cars: race to net zero marks revival of IPO plan

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Volvo Cars has been waiting at the lights for years. The Swedish carmaker’s journey back to the stock market was halted in 2018 when Chinese owner Geely scrapped flotation. A subsequent plan to merge and float the two businesses was dropped in February. Now the company is considering an initial public offering. Getting a green signal will require a sensible price.

The last IPO plan stalled when investors baulked at the $30bn sought by Geely. Volvo has advanced since then, particularly on electrification. Shares in peers such as Daimler, BMW, Stellantis and VW trade on an average trailing enterprise value-to-ebitda multiple of 9. If Volvo achieved the same, it would have an enterprise value of almost $20bn, using figures from S&P Capital IQ. The company is likely to argue that its success in China merits a higher valuation. But its operating profit margins are about half those of peers. 

Profitability should improve, as battery advances cut the cost of making electric cars. But Volvo has already benefited from a supportive owner. Geely, which paid $1.8bn in 2010 to buy Volvo from Ford, has given it access to funds and shared the capital costs of developing new platforms. That helped the return on capital shoot up to an average of 9 per cent over the past six years, well above that of BMW and VW. 

A lot depends on continued collaboration with Geely. An outright merger was deemed too complicated because the complexity of the ownership structure made it difficult to agree a price acceptable to Geely’s minority shareholders. But the Chinese company will retain a big stake. The two businesses will jointly own the legacy internal combustion engine business and each owns half of Polestar, the premium electric brand. 

Polestar aims to produce the first genuinely net zero car by 2030. That, and other goals, means that Volvo has some of the most ambitious climate plans in the car industry. Those green credentials could add some extra oomph. Even so, too racy a valuation will impede its chances of a successful float.

Lex recommends the FT’s Due Diligence newsletter, a curated briefing on the world of mergers and acquisitions. Click here to sign up



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Commodities broker Marex looks to list on London Stock Exchange

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One of the brokers with rights to trade on the historic trading floor London Metal Exchange is heading for an initial public offering as commodity markets enjoy the biggest boom since the early 2000s.

Marex, a brokerage controlled by two former Lehman Brothers investment bankers, said on Friday it was considering listing on the main market of the London Stock Exchange.

Should it proceed, Marex said the offer would consist of a sale of shares by existing investors and that it was aiming for a free float of at least 25 per cent, meaning it would be eligible for inclusion in widely followed FTSE indices.

London-based Marex employs about 1,000 people and is one of nine members of the Ring, the LME’s historic open outcry trading floor that is now threatened with closure after more than 140 years. It has a 16 per cent market share on the LME.

The company is controlled by JRJ Group, a private equity firm founded by Jeremy Isaacs, the former head of Lehman’s European operations, and Roger Nagioff, the bank’s ex-head of global fixed income.

JRJ has a 41 per cent indirect economic interest in Marex. It is expected to reduce that stake through the London IPO although it will remain a large shareholder.

People familiar with the plans said Marex was seeking a valuation of $650m-$800m. The company is about half the size of US rival Stonex Group, which has a market capitalisation of almost $1.4bn. The IPO could come as soon as June.

The company, which has been expanding aggressively through acquisitions, made pre-tax profits of $55m in the year to December, up from $46.6m a year earlier, on net revenue of $414.7m.

However, in 2018 pre-tax profits were just $13.4m after Marex took $31.9m of legal provisions related to a warehouse receipts fraud.

Marex makes more than half its revenue from commodity hedging services that help big commodity producers, consumers and traders manage price risk. Commissions from the group’s top 10 clients increased by 17 per cent to $49m in 2020.

“The attractiveness and resilience of our business model is demonstrated by our latest set of results, which showcase continued strong performance despite the obvious macro headwinds,” said Marex chief executive Ian Lowitt, who was paid $4m last year. His basic salary is almost twice that of the LSE’s CEO David Schwimmer.

JRJ Group and its partners Trilantic Capital Partners and BXR Group acquired a majority stake in Marex in 2010. A year later it bought Spectron to create one of the biggest commodity brokers in the world. The company has been up for sale for several years as JRJ has sought an exit from its investment.

It emerged in November that Marex had appointed Goldman Sachs and JPMorgan to help advise on a possible stock market listing. One of its no- executive directors is Stanley Fink, former CEO of hedge fund Man Group.

Marex said on Friday that acquisitions and expanding into “adjacent products” would continue to form a “central pillar of its strategy”. In November, Marex acquired Chicago-based equity derivatives firm XFA.

Commodity markets have boomed over the past year on the back strong demand from China, a post-pandemic pick up in other big economies and bets on the “greening” of the world economy.



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