Redox share price drops after IPO

One of the biggest IPOs in some time has taken place on the ASX today.

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Key points

  • Redox has completed its IPO on Monday
  • The chemicals and ingredients company lists with a market capitalisation of approximately $1.3 billion
  • It is the largest company of its kind in Australia

The Redox Limited (ASX: RDX) share price has hit the ASX boards on Monday.

After commencing trade at noon, the chemical and ingredients distributor's shares have fallen 3.5% from their listing price to $2.46.

What is Redox?

Redox is a leading chemical and ingredients distributor that is active in more than 1,000 specialty and commodity products.

It is the largest chemicals and ingredients distributor in Australia by revenue, as well as the 13th-largest in the Asia Pacific region and the 34th-largest worldwide. In FY 2022, it generated revenue of $1,081.8 million. It is now guiding to revenue of $1,244.1 million in FY 2023 and then $1,328.2 million in FY 2024.

Its products are being used in everyday society in many different ways. From the latest feed ingredients responsible for improved yields for farmers to the fluoride that delivers dental hygiene for millions of Australians.

In addition, its products are used in the mining sector to help recover critical minerals such as lithium and rare earths.

Its wide uses mean that Redox has no individual material customer contracts. In fact, its largest customer accounts for approximately 1.8% of total revenue, whereas the top five customers account for only approximately 7% of total revenue.

It is a similar story for supplies. No single supplier's products account for more than 3.1% of total revenue, with the top five suppliers accounting for no more than 12% of total revenue.

The Redox IPO

Redox shares hit the ASX boards today after the company completed its initial public offering (IPO) which raised approximately $402 million through the issue of approximately 157.7 million shares at a price of $2.55 per share.

Combined with existing shares on issue, this gave the company a market capitalisation of $1.339 billion at listing.

The proceeds from the IPO will be used primarily to repay loans and bank debt, as well as for working capital and growth funding.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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