Clarios Global LP, the world’s largest automotive battery maker, has filed for an initial public offering with the U.S. Securities and Exchange Commission.
Clarios produces roughly a third of vehicle batteries worldwide, including for electric vehicles. Investment giant Brookfield Business Partners LP purchased the company for US$12.8-billion in 2019 from Johnson Controls International PLC. It is also backed by pension-fund manager Caisse de dépôt et placement du Québec.
“There is strong capital market demand for high-quality industrial businesses and we believe Clarios is in a good position to garner a strong following in the public markets,” Cyrus Madon, chief executive of Brookfield Business Partners, said on a Wednesday conference call.
Mr. Madon said proceeds from a potential IPO would be expected to reduce Clarios’s debt. The filing by Clarios with the SEC was confidential, which means no prospectus was made available. Brookfield used US$9.9-billion of its own debt to purchase the company.
“Public market valuations are strong, that’s creating obvious competition for private equity buyers,” Mr. Madon said. “The flip side of that, it’s also providing great opportunity to begin monetizing some investments.”
The company could have a valuation topping US$20-billion in its IPO, according to a Reuters report.
Clarios, which employs 16,000 people, recorded US$125-million in earnings before interest, taxes, depreciation and amortization in the first quarter of 2021, a 40-per-cent increase year over year, when the COVID-19 pandemic periodically shut down production at the company.
In a 2019 report, Brookfield described a positive outlook for Clarios’s growth.
“The industry expects the total number of cars on the road to grow by 30 per cent globally over the next 10 years,” the report said. “Clarios will provide batteries to the manufacturers of these cars, as well as replacement batteries, for decades to come.”
The company, based in Glendale, Wis., has permanently closed some of its U.S. facilities in recent months. In January, it shuttered a battery recycling plant in Florence, S.C. In November, it closed a battery assembly facility in Middletown, Del. The decision was “exacerbated by the COVID-19 pandemic,” according to a company spokesperson.
A Clarios IPO would follow a wave of capital markets activity in the automotive sector. In February, electric-vehicle startup Lucid Motors Inc. merged with Churchill Capital Corp. IV, a special-purpose acquisition company, in a US$24-billion deal. In the same month, Canadian auto-parts maker ABC Technologies Holdings Inc. listed on the Toronto Stock Exchange in a $100-million IPO.
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