Apotex Health Corp. shares rose in their first morning of trading after the Toronto-based drug manufacturer completed a larger-than-expected initial public offering, signaling strong investor demand. The company originally aimed to raise $1 billion and price shares between $20 and $24, but demand led it to increase the offering to $1.3 billion and price the stock at the top of the range at $24 per share. By midday on Wednesday, shares had climbed 12% to $26.85 on the Toronto Stock Exchange, even as broader markets weakened, with the S&P/TSX Composite Index down 0.3% and major U.S. indexes falling about 1%.
The upsized IPO allowed private equity backer SK Capital Partners LP and other private shareholders to sell more stock than planned. Their combined stake sale rose from an initial target of $150 million to $450 million. The remaining $850 million raised in the offering will go to Apotex, which plans to use the proceeds to reduce debt. The strong response to the listing is being seen as a positive development for Canadian capital markets, which have faced difficulty attracting major IPOs in recent years. Several technology companies that went public during the early COVID-19 period later saw their shares fall sharply, and some were eventually sold to private equity firms at reduced valuations.
Apotex’s public debut is the largest in Canada since Definity Financial Corp. raised $1.4 billion in its 2021 share offering. Founded in 1974 by the late Barry Sherman, Apotex built its business by making generic versions of drugs after patents expired. Sherman became known for aggressive legal battles over pharmaceutical patents against major drugmakers and competitors. Today, Apotex employs more than 6,500 people around the world, produces 25 billion doses of medicine annually, and sells products in 70 countries.
In its latest fiscal year, Apotex generated 45% of sales in Canada, 46% in the United States, and the rest in international markets. The company positioned its IPO as an opportunity for investors to benefit from long-term health care trends, including the rising prevalence of chronic disease and the aging global population, which are expected to increase demand for medicines and related products. While SK Capital is selling part of its holdings through the IPO, it will remain a major shareholder in the company.
