WE Soda's London IPO Breathes Life into the Market.

Introduction

WE Soda, the world's largest producer of natural soda ash, has announced its plans for a listing on the main bourse in London, signaling a much-needed boost for a market struggling to attract new listings. With the controlling shareholder, Turkish industrial conglomerate Ciner Group, set to sell shares in the initial public offering, WE Soda aims to achieve a market capitalization significantly higher than its earlier target of $5 billion, following a surge in profits. This decision comes as London's IPO market faces challenges due to rising interest rates, inflation concerns, and market volatility. By reducing the free float to 10% from 25%, WE Soda has capitalized on recent rule changes in London, paving the way for its listing.

WE Soda: A Dominant Force in Soda Ash Production

WE Soda stands as a leading producer of soda ash globally, boasting one of the lowest production costs in the industry. In 2022, the company produced approximately 5 million metric tons of natural soda ash and sodium bicarbonate. Soda ash finds extensive applications in glass-making and serves as a crucial ingredient in chemicals utilized in lithium-ion batteries, positioning WE Soda to capitalize on the growing demand for such batteries in the future. While most soda ash production occurs synthetically through an energy-intensive process involving brine and limestone, WE Soda extracts it in its mineral form at its Turkish sites. Moreover, the company has a new greenfield project in Wyoming that is projected to commence operations before 2030.

Revitalizing London's IPO Market

The decision by WE Soda to list on London's main bourse carries significant implications for the struggling IPO market in the city. Data compiled by Bloomberg reveals that the market has only raised approximately $600 million thus far in 2023. Factors such as rising interest rates, inflation concerns, and market volatility have deterred many investors, leading them to seek refuge in stable, cash-generative assets. However, WE Soda's entry into the market is expected to inject new life and reignite interest among investors.

Investor Interest and Support for WE Soda's Listing

WE Soda's decision to go public has been bolstered by its positive engagement with potential investors. The company's chief strategy and risk officer, Nicholas Hall, expressed that they have engaged in a "very broad dialog" with investors and received exceedingly supportive feedback during meetings. Mr. Hall, formerly a managing director at JPMorgan Chase & Co., believes that this positive sentiment has contributed to WE Soda's decision to pursue the IPO.

Rule Changes Facilitating the Listing

The decision to list in London has been partly facilitated by recent rule changes allowing companies to reduce their free float from 25% to 10%. Given WE Soda's substantial size, this change has provided the company with greater flexibility and paved the way for its successful listing.

Ciner Group's Diverse Presence and Strategic Partnerships

As the controlling shareholder of WE Soda, the Ciner Group boasts a diverse presence across various industries, including energy, shipping, and media. Under a partnership with Bloomberg LP, the parent company of Bloomberg News, Ciner Group operates the BloombergHT television channel in Turkey, further enhancing its strategic positioning.

Strong Consortium of Advisors

WE Soda's IPO is being facilitated by a consortium of prominent financial institutions. BNP Paribas SA, Goldman Sachs Group Inc., and JPMorgan are serving as joint global coordinators for the offering, while Deutsche Bank AG, HSBC Holdings Plc, Liberum, Morgan Stanley, MUFG, and Numis Corp. are acting as joint bookrunners. The involvement of these respected institutions underscores the confidence in WE Soda's prospects and the significance of its listing.

Conclusion

WE Soda's upcoming listing on London's main bourse brings a much-needed injection of vitality to the city's IPO market. As the largest producer of natural soda ash globally, WE Soda's robust production capabilities, cost advantage, and diverse applications position it favorably for future growth. The decision to reduce the free float, coupled with positive investor engagement, underscores the company's confidence in its IPO prospects. With a strong consortium of advisors by its side, WE Soda is poised to make a significant impact on London's IPO market, attracting investors seeking promising opportunities in stable, cash-generative assets.