Legence tests investors with US$754m Nasdaq IPO
Blackstone-backed Legence launched an up to US$754m Nasdaq IPO on Tuesday that will test investor support for high leverage new issues when marketed at an attractive valuation.
Goldman Sachs and Jefferies are leading 24 banks in marketing 26m shares at US$25–$29 for pricing on Thursday September 11.
The IPO targets up to US$4.5bn of enterprise value for the builder and installer of industrial HVAC systems at the top of the range, of which US$1.5bn is debt.
Legence has completed over 20 tuck-in acquisitions since Blackstone bought its predecessor company Therma in 2020. It is using the IPO proceeds to slash its net leverage from more than six times to less than four times net debt/Ebitda.
As a builder of industrial HVAC systems, Legence offers exposure to popular investment trends such as the AI infrastructure buildout and reshoring of US manufacturing, arguably at a discounted price.
The IPO is being marketed at a low double-digit multiple of 2026 EV/Ebitda forecasts, versus public comps WSP Global (14 times), Quanta Services (19 times), Comfort Systems (19 times) and SPX Technologies (18 times) trading in the mid-to-high teens, according to LSEG data.
In the six months ended June 30, Legence generated US$123m of adjusted Ebitda as revenue grew by 11% to US$1.1bn.
More than half of that revenue came from customers in high-growth sectors such as data centres, semiconductor manufacturing, life science and healthcare.
While not selling on the base deal, Blackstone is contributing 3.2m shares to the greenshoe.
Legence is hoping to end a disappointing run of sponsor-backed IPOs that began in July with NIQ Global Intelligence (down 20.6% currently) and McGraw Hill (–16.5%). Blackstone will see its stake in Legence diluted to 71%.