EuroAPI, Sanofi’s pharmaceutical-ingredients spinoff, rose on its first trading day in Paris, in an early sign that appetite is recovering in Europe’s dormant listings market.
Shares trade at 12.63 euros as of 9:07 a.m. in France, above the reference price of 12 euros set by the Euronext exchange after markets closed on Thursday. The spinoff valued Euroapi at 1.1 billion euros ($1.2 billion).
Sanofi had previously planned to list the business via an initial public offering, but decided to pursue a spinoff instead due to market turmoil since the start of the year. Europe’s IPO market has been shuttered for the past two months as the war in Ukraine and soaring inflation weigh on investor sentiment.
EuroAPI Chief Executive Officer Karl Rotthier said in an interview:
The most important element was that we get listed and that we become independent. That was the reason why, when we saw the IPO window was closed, we straight away went for another instrument.
EuroAPI, which had 892.8 million euros in sales last year, helps secure manufacturing and distribution capacities for Europe at a time of increasing supply-chain snags and shortages of essential medicines. China and India are among the countries that are big producers of drug ingredients.
Sanofi, which retains 30% of the unit’s share capital, declined as much as 3.8% on Friday. The French government took a 12% stake in EuroAPI via EPIC Bpifrance.
Active pharmaceutical ingredients are chemical molecules and biological substances essential to any drug. EuroAPI has more than 500 customers, 3,350 employees and six production sites in Europe, according to its website.
Early on in the coronavirus pandemic, France suffered from shortages of face-masks and some essential medicines. The government’s stake in EuroAPI reflects President Emmanuel Macron’s plan to bolster national sovereignty in areas ranging from pharmaceuticals and energy to retailers and food makers.
Geopolitical tensions have also driven home the importance of the supply chain in this very strategic industry segment, Rotthier said:
We can play a very important role in European sovereignty as a reliable supplier for the entire market.
Investors got one EuroAPI share for every 23 Sanofi shares held. L’Oreal SA, the French drugmaker’s top holder, has agreed not to sell any stock in the unit for one year.
BNP Paribas SA is the listing agent, also advising alongside Bank of America Corp., JPMorgan Chase & Co., Credit Agricole SA, Deutsche Bank AG, Natixis SA and Societe Generale SA.