Business Irish

Monday 23 September 2019

IPL Plastics chief Walsh "wouldn't recommend" Canada IPO

'Would I go through the process again? I think the answer to that is no,' plastics chief tells conference

Talking shop: guest speakers at the Dublin Castle forum Susan Spence, co-founder and President of SoftCo; Alan Walsh, CEO of IPL Plastics; Julie Sinnamon, CEO Enterprise Ireland; Bob Etchingham, CEO Applegreen; Siobhan Talbot CEO Glanbia; and Brendan Jennings CEO of Deloitte Ireland
Talking shop: guest speakers at the Dublin Castle forum Susan Spence, co-founder and President of SoftCo; Alan Walsh, CEO of IPL Plastics; Julie Sinnamon, CEO Enterprise Ireland; Bob Etchingham, CEO Applegreen; Siobhan Talbot CEO Glanbia; and Brendan Jennings CEO of Deloitte Ireland
Gavin McLoughlin

Gavin McLoughlin

IPL Plastics chief executive Alan Walsh has said he "wouldn't recommend" the process of listing a company in Canada, and doesn't believe he would do it again.

The IPL boss told an event in Dublin that the process was "quite involved" and had added a lot of cost to the business.

The company's shares previously traded on an informal "grey market".

Mr Walsh said the company had initially decided to list in Canada because it wanted to move to a "proper listed environment".

"The grey market wasn't a sustainable future for us from the point of view that we were reporting like a public company, but didn't necessarily have any of the advantages of being on the public markets," Mr Walsh said at the Enterprise Ireland/Deloitte CEO Forum at Dublin Castle.

"We went through an assessment process and ultimately, without going into the history, we decided that we would list on the stock exchange in Toronto, which we did at the end of June.

"I wouldn't recommend anyone go through that process, it was quite involved and mainly it was because we had to go through so many steps ... given the structure that we had etc."

Mr Walsh said having to disclose quarterly reports was a "bit of a treadmill process" and that companies need to be careful that it doesn't encourage short-termism within the business.

He said he had told investors on IPL's IPO roadshow that the company was going to spend a significant amount of money on capital expenditure, and that they shouldn't expect a return on that for two years.

The expenditure is going on capacity expansion, as well as automation with the labour market in the United States proving very tight because of near-full employment.

"Some companies do fall into that trap of becoming very short-term focused in terms of what happens in the next quarter," Mr Walsh said.

He said that once a system was set up for quarterly reporting it "works fine", but he added that this "added a lot of cost to the business".

"You have to give a lot of detailed information on the business into the public domain, that's just part and parcel of being a public company, and as I said would I go through the process again? I think the answer to that is no."

IPL recently said it would start a new process designed to boost its margins.

The company's large format packing and environmental solutions division will be targeted in particular, but all divisions will be examined. Job losses are not expected, in the initial phase of the programme at least.

IPL's adjusted ebitda (earnings before interest, tax, depreciation and amortisation) was down 20pc year-on-year in the third quarter. That's despite a 7.5pc revenue boost.

It has been hit by rising input costs, and its shares are trading well below its IPO price of CAD$13.50. At 1pm in Toronto yesterday the shares were trading around CAD$8.19.

Mr Walsh said the margin transformation programme does not preclude the company from making further acquisitions. A recent Bloomberg report said IPL was in merger talks with Dutch firm Schoeller Allibert. IPL did not comment for that report.

Irish Independent

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