Kingspan, the Cavan-based insulation giant, said it has raised €750 million through the sale of its first public bond deal with demand from investors for more than four and a half times the amount of notes on offer.
The notes were priced to carry a fixed coupon, or interest rate, of 3.5 per cent and will mature in seven years’ time.
“This is another capital market milestone for Kingspan. In making our debut into public debt markets we have opened a highly liquid capital pool on attractive terms to fund the next wave of our global growth. We are firmly committed to our strong investment grade rating”.
The deal comes as Kingspan remains active in the acquisitions market, having spent close to €2.5 billion on purchases since the start of 2019, according to Davy analyst Flor O’Donoghue. Earlier this week, the company, led by chief executive Gene Murtagh, disclosed that it had acquired a majority stake in Sweden’s Nordic Waterproofing, a move which the company said would lift its annualised roofing and waterproofing revenues to approximately €1 billion.
The Cavan-based group said that, following the purchase of a further 26.5 per cent of shares on Friday, it now has a 62.6 per cent interest in the business.
The deal also comes seven weeks after Kingspan was among a number of parties subject to severe criticism in a report on the 2017 Grenfell tower fire in London. Kingspan’s Kooktherm K15 insulation board was used on about 5 per cent of the plastic foam insulation layer of external cladding of the block, unknown to the company, during a refurbishment of the London tower that was completed in 2016.
Although the report exempted the Irish group from responsibility for the spread of the fire on the night, it variously found that Kingspan had “knowingly” created “a false market” for the insulation board, had used “dishonest strategies” and had shown “a complete disregard for fire safety”. Kingspan said after the report was published that it has “has long acknowledged the wholly unacceptable historical failings that occurred in part of our UK insulation business”.
Goodbody Stockbrokers analyst Shane Carberry said that strong demand among bond investors for Kingspan’s debut issue “highlights that the group’s quality is not only recognised from equity holders but also debt holders and its adds to the Group’s broad array of funding options”.
He said that Kingspan could more than double sales, which stood at €8.1 billion last year, and profits by 2023.
“Even with the investment required to achieve a doubling of sales and profits over that period, the group’s balance sheet is not stretched,” he said.
Kingspan’s net debt stood at just over €1.5 billion at the end of June, leaving that at 1.5 times earnings before interest, tax, depreciation and amortisation (Ebitda) for the previous 12 months.
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