initial public offerings (IPOs) trading on American exchanges

Thursday, October 11, 2018

Livent (LTHM) began trading on the NYSE on 11 October 2018

  • Livent priced 20 mln share IPO at $17 per share, below the expected $18-20 per share range  that the company had expected in its filing on Oct. 1.
  • The IPO raised $390 million.
  • Livent is the largest lithium pure play trading on a major U.S. stock exchange.
  • Headquarters: Philadelphia, PA
  • Founded: 2018 
  • Both the world's largest and second largest producers of lithium, North Carolina-based Albemarle (NYSE:ALB) and Chile-based Sociedad Quimica y Minera de Chile, or SQM (NYSE:SQM), respectively, are listed on the NYSE, but neither is a pure play. China's Ganfeng Lithium, FMC, and China's Tianqi Lithium round out the top five players, though not necessarily in that order.

Livent Corporation President and CEO Paul Graves is applauded as he rings a ceremonial bell on the floor of the New York Stock Exchange as his company's IPO begins trading on Thursday.

President and CEO Paul Graves and members of the leadership team from lithium producer Livent Corp ring the opening bell at the New York Stock Exchange

NEW YORK—The market for lithium will remain tight through 2025 as producers struggle to lift output fast enough to meet demand for the material that’s essential in making batteries for electric vehicles, according to the sector’s newest public company, Livent Corp.

“We think demand is going to grow almost five times larger in 2025 than it was in 2017,” chief executive officer Paul Graves said in an interview Thursday in New York, as the supplier made its trading debut. “Our biggest challenge is producing enough to meet the demand — there’s a much greater risk that this market is consistently in a deficit in the near future.”

The longer-term demand outlook from Livent, a spin off from chemical maker FMC Corp., echoes the view from Chinese competitor, Jiangxi Ganfeng Lithium Co., which this week sold shares in Hong Kong for the first time.

Yet investors aren’t immediately swayed, focusing instead on concerns new supply may flood the market in the short term, and on the material’s decline in 2018 after a rally that tripled prices in the three years through 2017.

Shares of Philadelphia-based Livent closed little changed Thursday, while Ganfeng plunged 29 per cent on its Hong Kong debut — even after pricing the shares at the bottom of a target range — before rebounding as much as 13 per cent in early Friday trading.

“The poor performance reflects lack of confidence in the near-term lithium market,” Argonaut Securities (Asia) Ltd. analysts including Helen Lau said in a Friday note. “We think markets have indeed overreacted to the current price performance and overlooked the demand growth prospects.”

Some companies are struggling to raise money for expansion, while others face regulatory hurdles, dimming the supply outlook, said Livent’s Graves, 47, who was FMC’s CFO and worked at Goldman Sachs Group Inc. for 12 years, including as co-head of natural resources in Asia. “Our next priority is to expand our Argentina production as quickly as we can to meet that downstream need,” he said. Livent operates at sites including Salar del Hombre Muerto in Argentina.

There’s a risk of a lithium shortage longer term, particularly from around 2023 to 2024, when production of electric vehicles is likely to accelerate, Ganfeng’s Vice Chairman Wang Xiaoshen said in an interview Tuesday.

Prices of lithium materials, and producer shares, have declined as the sector moved into a period of oversupply after mines fired up in Australia, Bloomberg New Energy Finance analysts including James Frith wrote in a Thursday note. The lithium sector is likely to tighten again by 2024, according to Frith.

Even after the weaker-than-expected trading debuts, lithium companies are likely to raise a record $1 billion (U.S.) on public markets in 2018, Bloomberg NEF said in its note. China’s second-biggest producer, Tianqi Lithium Corp., also plans to sell shares in Hong Kong this year.

In South America, lithium carbonate prices fell to $14,500 per ton in September, from a record high of $15,750 per ton in June, according to Benchmark Mineral Intelligence. The research firm’s gauge of a range prices across the main regions is down 8.2 per cent this year, after climbing 208 per cent in the three years ended Dec. 31.

“I think investors have decided to pause the investments around lithium and cobalt,” Chris Berry, a New York-based analyst and founder of research firm House Mountain Partners LLC, said by phone on Wednesday. In addition to weaker battery metals prices, “everyone’s skittish about China, tariffs, late-cycle economic growth and interest rates on the rise in the U.S.,” he said.

No comments:

Post a Comment