Carel Industries S.p.A. [BIT: CRL] – Market Cap as of 08/04/2019:  €1.05bn


On Monday 11th of June 2018, Carel Industries S.p.A., a global player in the dehumidification and refrigeration sector, started trading on the MTA of Borsa Italiana. The initial price was €7.2 per share, but strong demand quickly drove the price up to €8.4, causing the greenshoe option to be triggered. This was the first IPO of the year on the MTA segment, as political and financial instability in Italy discouraged several other companies from listing, and its success signalled an appetite for quality stocks on the Italian market.

About Carel Industries

Carel was founded in 1973, in the province of Padova, were it is still headquartered to this day. Starting from the 1990s it gradually expanded globally and now it operates 7 production facilities across the world and employs over 1300 people, split among 21 region-based subsidiaries. In 2018, the turnover of the group was €280.2m, up 9.7% from the €255.4 of 2017, of which 51% came from western Europe, that is also the fastest growing area at 14%, while the rest of revenues is split almost evenly among rest of Europe, North America and APAC. The revenues can be further broken down between the two main sectors of operation: 60% coming from HVAC (Heating Ventilation and Air Conditioning) and 40% from industrial refrigeration systems. The EBITDA margin is 19.7%, computed using the value of €55.2m net of the impact of M&A activity, and the Net Income for 2018 was 30.7m, roughly the same as the previous year after the opposing effects of an increase in D&A expense due to new investments, balanced by a decrease in tax rate from 26% to 18%.

In 2018 the company generated €9.6m in FCF, that were partly distributed in a special dividend of €30m – drawn also from the previous €40m cash balance – and partly used for the acquisitions of Hygromtic (German Humidification sector) and Recuperator (Air conditioning solutions) that amounted to €78.2m, resulting in a negative Net Financial Position of -€59m.

Carel is investing a lot in several projects to increase its production capabilities as well as expanding its product offering toward digital services and Internet of Things (IoT). Some examples of such investments are the new plant that will triple production in China that will start operating this spring, the expansion in the US that will double the north American production and finally a number of pilot projects included in the plan called “Go-to-Market” that will broaden the range of services. The company proudly states that it yearly invests between 6 and 7 percent of revenues in R&D and an additional 3% in improving the production process technology, in order to stay ahead of the competition.

IPO Structure

Specifically targeting institutional investors, on May 25th, 2018 Carel officially initiated the book-building process for its IPO, scheduled to take place on June 11th.

The company decided to sell on the Italian Stock Exchange 35m euro-denominated shares, representing 35% of the share capital, directly flowing from the corporation’s original founders and main shareholders, i.e. Luigi Rossi Luciani S.A.p.A. (selling 21,185,945 of the total 35,000,000) and Luigi Nalini S.A.p.A. (selling the remaining 13,825,055). These shares already constituted Carel’s capital at the time when the company went public, therefore the aim of the IPO was not to raise proceeds.

Few days after the opening of the book-building process, the company had already hit a 4.5x oversubscription. Private allocation orders then closed on June 6th, with the price settling right in the middle of the forecasted range. As a matter of fact, the agreed offer price was finally settled at €7.20, when the minimum and maximum figures had instead been fixed at €6.7 and €7.8, respectively. Consequently, the company’s overall market capitalization at the time of the IPO amounted to €720m.

From a valuation standpoint, the corporation officially started trading at discount against peers, from what can be inferred by confronting the company’s multiples with the industry averages. Indeed, while Carel showed an EV/EBITDA at IPO between 13.0x and 15.2x, and a P/E falling in the range 21.5x – 25.0x, the main competitors all throughout the world recorded an average 17.6x implied EV/EBITDA and an average 29.7x P/E (for the sake of clearance, it is worth remarking that all the figures reflect companies’ balances as of December 31st, 2017). Those aforementioned selected comparable companies belong to the HVAC & Refrigeration industry, namely being: AAON Inc. (US), Belimo Holding AG (Switzerland), Lennox International Inc. (US), Munters Group AB (Sweden), Nibe Industrier AB (Sweden).

Goldman Sachs International and Mediobanca acted as joint global coordinators and joint book runners, with Mediobanca also acting as a specialist for the stabilization in flotation. These mentioned investment banks entered an overallotment option with the issuer, specifically setting up stock lending with its two selling shareholders, for a maximum of 3,177,825 shares from Luigi Rossi S.A.p.A. and 2,072,175 from Luigi Nalini S.A.p.A. Therefore, the overall potential exercise of the greenshoe would have brought about 5.25m additional shares (i.e. 15% of the offered 35m shares), to be purchased at €7.20 and with 180 days lock-up.

The positive reaction in the first days of trading triggered the complete exercise of the greenshoe, bringing €289.8m in capital from investors in the pockets of the two main selling shareholders. The resulting framework left 36.17% of share capital (corresponding to 45.28% voting rights thanks to a double voting clause) still in the hands of Luigi Rossi S.p.A and 23.58% share capital (corresponding to 29.52% voting rights) in the hands of Luigi Nalini S.A.p.A. The remaining 40.25% (corresponding to 25.20% voting rights) was floated the market.

The peculiarity of the issuance is that in case a shareholder keeps continuously the security throughout the so-called “relevant period” (corresponding to 24 months), then he/she is entitled to two voting rights for each share. Therefore the two historical shareholders are granted control thanks to the multiple voting rights. 

The flotation process costed Carel approximately €2.3m, excluding banking and advising fees.

IPO Rationale

As mentioned before the proceeds were not the goal of the IPO, in fact, the executives were probably pursuing three other main objectives: first, they might have wanted to cash out of the investment by selling shares and opening the capital to external investors. Second, they might have sought some additional visibility for Carel, so to pave the way for a future successful capital raise, when the company will eventually feel the need for a capital increase. And third, by making shares tradable on the marketplace, they might have been trying to secure an alternative bargaining chip, that they could use in case the company decided to enter into extraordinary transactions, such as M&A processes, in the years to come.

Investor Response and Market Reaction

Launched on June 11th, 2018 on the MTA and immediately being included in the STAR list, Carel’s shares successfully met investors’ appetite. Indeed, despite the uncertainties infecting the market at the time, which had already forced companies such as Itema, Estra and Rainbow to abstain from the listing, Carel’s stocks have been warmly welcomed by the markets. In the first trading day they jumped 13% and then again 6%, to then stabilize around €8.4 by the end of the first week, up 16.7% from IPO price.

In the following months the stock gradually climbed up, subject to volatility swings due to Italian country risk, and reached 10.22 per share the last close on April 14th.

Some months after the IPO, Carel’s executives approved the so-called “Shares’ Performance Plan 2018-2022”, providing for the distribution of free additional shares to the main company’s value creators. Specifically, this ad-personam measure was aimed at improving on investors’ retention, since the recipients of these securities were locked in for a 2-year timeframe.

Moreover, on the grounds of its positive performance, Carel was included in the FTSE Italia Mid Cap, replacing RCS MediaGroup on September 24th, 2018.


Goldman Sachs and Mediobanca acted as Joint Global Coordinators and Bookrunners. Mediobanca was also Sponsor of the admission to listing of the Shares on the Mercato Telematico Azionario and acted as Specialist and Stabilization Agent in connection with the listing. Lazard was financial advisor to Carel.
Chiomenti and Sullivan & Cromwell provided legal advice to Carel. Linklaters acted as legal advisor to the Joint Global Coordinators.


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