By Echo Wang and Scott Murdoch
(Reuters) - Amer Sports raised $1.37 billion in a discounted U.S. initial public offering (IPO) on Wednesday, after investors expressed concerns about its growing reliance on China for its revenue.
It was another blow to the U.S. IPO market seeking to recover after two years of subdued activity. A poor performance from Amer Sports could discourage other IPO hopefuls.
A sizeable but smaller company, BrightSpring Health Services, priced its $633 million offering last week below its indicated range. Shares in BrightSpring, owned by private equity firm KKR, have been trading below their discounted IPO price.
Amer Sports, owner of Arc'teryx outdoor apparel, Salomon sporting goods and Wilson tennis gear, said it priced its IPO at $13 per share, below its $16 to $18 per share indicated range. The company added that it had sold 5 million more shares than the 100 million shares it had earmarked.
The IPO values Amer Sports at about $6.3 billion. Its shares will debut on the New York Stock Exchange on Thursday.
Amer Sports generated 19.4% of its sales in China in the first nine months of 2023, up from 8.3% in 2022, its IPO prospectus shows. Most of the sales come from the Americas and Europe, and while revenue in these regions has been growing, sales in China were up by 68% in the first nine months of 2023 compared to the corresponding period in 2022.
Sources participating in the IPO said earlier on Wednesday that, despite this growth, some potential investors are concerned about Amer Sports' fortunes being intertwined with China's economy.
A property crisis and a local government debt crunch has driven many investors to reduce exposure to China.
Amer Sports warned in its IPO prospectus that escalating trade tensions could lead to future tariffs or other curbs on its ability to sell goods in the U.S. that it makes or sources in China.
Founded in Helsinki in 1950, Amer Sports was acquired by a consortium of primarily Chinese firms in 2019 for 4.6 billion euros ($5 billion). Anta Sports, a Chinese athletic clothing manufacturer with aspirations to take on Western rivals such as Nike (NYSE:NKE) and Adidas (OTC:ADDYY), holds a 56% stake.
Under Anta's ownership, Amer Sports' ties to China have grown. The company says in its IPO prospectus it now has key suppliers and manufacturing facilities in China, and that about 33% of its products sourced from third-party suppliers were manufactured in the country in 2022.
Some of the investors have also expressed concerns that the company's Salomon and Wilson brands are showing lower margins and slower growth than Arc'teryx, the sources said. While Arc'teryx sales rose 65% in the first nine months of 2023, Salomon and Wilson sales rose 35% and 10%, respectively.