STJ advises Cary Group Holding AB on its c. SEK 5.275bn (US$610m) IPO on NASDAQ Stockholm

24 September 2021

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STJ advises Cary Group Holding AB on its c. SEK5.275bn (US$610m) IPO on NASDAQ Stockholm

 Cary Group, a leading vehicle glass repair and replacement provider, completed its successful c. SEK5.3bn IPO (US$610m) on Nasdaq Stockholm on 23rd September 2021.

 STJ Advisors advised the Company and the Principal Shareholder, Nordic Capital. This is STJ’s 2nd IPO for Nordic Capital following the $1.22bn IPO of Nordnet in November 2020 and our 6th transaction for Nordic Capital.

 Cary Group is a leading vehicle glass repair and replacement provider that prolongs the life cycle of vehicles and maintains their safety features in conjunction with car insurance providers. The Company provides services at convenient locations, with a high quality, superior customer experience and smart solutions to make sustainable car care easier. A significant area of specialisation is in the calibration of windscreens with the increasing use of ADAS systems. The Company was founded as part of Ryds Glas in 1947 (founding family being the Ryd family). The Company became a separate entity under the name Ryds Bilglas in 2011 and was renamed Cary Group in 2020.

Cary Group provides a unique combination of best-in-class profitability, with outstanding organic growth and a unique position as a leading M&A compounder in a fragmented market. A clear competitor (although larger scale) in Belron provided a good benchmark for the IPO with the Cary IPO pricing at a premium to the private market multiples achieved for Belron and very close to the Swedish M&A compounders which are trading at all-time highs.

 The process was initially structured as an IPO-led dual-track process, with a compressed timetable, a narrow M&A process and clear gating items to provide shareholders with sufficient transparency across tracks to make informed decisions at every step. The M&A was ultimately shelved prior to ITF once we had a clear view of and confidence around an achievable IPO outcome.

 The IPO was marketed to Swedish and international institutions and to retail investors. An extensive investor education effort by Management pre-ITF involving early look meetings, deep dive events and pilot fishing with more than 60 investors, provided a high degree of visibility on investor demand and comfort around a potential valuation outcome. Of this investor group, c. 20 investors were taken through an NDA process, 6 of which became cornerstone investors at SEK70 per share (9.2bn equity value) and the rest were taken into an anchor tranche which helped provided a very rapid books covered message.

The ITF was published with strong support from these investors who constituted a cornerstone tranche of c. SEK3.15bn (c. 34% of the Company and c. 60% of the IPO) including the highest quality Swedish and international investors; AMF, Funds managed and advised by Capital World Investors, Funds managed by Öhman Fonder, ODIN Fund Management, SEB Investment Management and Swedbank Robur. 

 Given the early visibility of demand and confidence around the price level, a compressed 3-day PDIE period and subsequent 6-day roadshow/bookbuilding period (minimum for retail) was recommended. The IPO was launched with a fixed price of SEK70 per share and a fixed size of c. SEK5.275bn; a combination of primary and secondary representing c. 57.2% of the Company post-greenshoe. The IPO was covered on the full deal size within hours of books opening with strong support from a very wide range of investors.

 Ultimately, books were multiple times oversubscribed. Allocations had to manage a very high-quality book of more than 230 investors – and a mix of local and international long only funds, hedge funds and family offices against the limited remaining shares outside the cornerstone tranche. A clear focus was made on the quality of allocations to keep the book tight and ensure a healthy and stable aftermarket – the share price opened up 10% at SEK77 and traded above this level through the day eventually closing up c. 20% at c. SEK86 after a “buyer squeeze” including late index buying but on overall very thin volumes (10% of the offer).

STJ acted as the “home team” exit advisor and advised on all aspects of the dual-track process, including structuring of the process to provide transparency and control, positioning, appointment and management of the bank syndicate and wider advisors, the investor marketing process including a strong push to broaden early look and deep dive education against a busy market leading to outstanding levels of investor conversion. STJ also advised on key decisions on timing, sizing, pricing, and allocation of the IPO.

 The enthusiasm and strength of the Management team were instrumental in securing such strong investor support for the case against a very busy IPO pipeline and overall fragile market environment with some IPOs pulled/restructured/trading down at the same time of the Cary IPO pricing.

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