CDPQ Portfolio Company Revives IPO

By David G. Barry

A portfolio company of Caisse de dépôt et placement du Québec (CDPQ) is seeking to accomplish something that few companies have done in 2022: go public.

Clarios International, which manufactures low-voltage vehicle batteries, has revived its initial public offering, disclosing that it plans to raise up to $100 million. However, IPO research firm Renaissance Capital said it expects the Milwaukee company to raise up to $1 billion.

Clarios originally filed to go public in 2021, looking to raise $1.7 billion by offering 88.1 million shares at a price range of between $17 and $21. Using those figures, it would have had a market capitalization of $10.1 billion. It, however, postponed the offering a year ago, citing market conditions.

CDPQ, Canada’s second-largest pension fund, teamed up with Brookfield Business Partners to buy Clarios – then known as Johnson Controls’ Power Solutions business – in 2019 for approximately $13.2 billion.

In making the acquisition, Stéphane Etroy, CDPQ’s then-head of private equity and an executive vice president, said at the time that the “transaction enables us to acquire not only the world leader in automotive batteries, but also a model in terms of environmental and health and safety measures, that runs one of the most efficient industrial recycling systems globally.”

Etroy left CDPQ in 2020 to become a partner and head of European private equity for the Ares Private Equity Group.

For the year ended Sept. 30, Clarios reported a loss of $41 million on revenue of $8.8 billion. That compared with a loss of $442 million on revenue of $7.6 billion for the year prior.

Clarios is seeking to do something that few companies have done in 2022. In the first half of the year, just 77 companies went public in the United States and other parts of the Americas, according to EY. That was a 73% drop from the year-earlier period. Those 77 companies also generated proceeds of just $5 billion, or 95% less than the first six months of 2021.

Even worse, the second quarter was the worst quarter for IPOs in the United States since 2009 as just 21 companies went public, according to Renaissance Capital.

It's also worth noting that just two companies that have gone public on U.S. exchanges this year have raised more than $500 million: TPG Inc. and Bausch + Lomb Co. Both stocks are down 13% since their IPOs.