Kingspan shares soared on Tuesday as the insulation manufacturer said it is considering floating its advanced building systems unit Advnsys, which is focused on the global data centres boom and could to be worth €6 billion.
The Cavan-based group is weighing floating about 25 per cent the business on Euronext Amsterdam as soon as the first quarter of next year, executives said on a call with analysts.
This would come as a blow to its sister exchange, Euronext Dublin, operator of the Irish market, which has seen a number of high-profile company exits in recent years and not hosted an initial public offering (IPO) since late 2021.
In any potential IPO structure, Kingspan will remain a strong majority shareholder of Advnsys and will continue to consolidate its revenues and earnings, Kingspan said in a statement.
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Shares in Kingspan jumped as much as 13.5 per cent to €74.85 on Tuesday morning.
Advnsys is a world leader in bespoke critical infrastructure primarily focused on data centres, ventilation, and daylighting. The business, which is on track to generate €1.6 billion in revenues this year, is uniquely positioned to deliver a growing proposition for global customers in the rapidly expanding AI and data centre market, Kingspan said.
“The opportunity is really enormous and has been erupting before our eyes at a pace that’s way beyond what we expected even a couple of months ago,” chief executive Gene Murtagh said on the call.
While he said that about 40 per cent of Advnsys’s earnings currently come for providing infrastructure to the tech sector, particularly to data centres, this is expected to grow to about 75 per cent of an even bigger business in the next three to five years.
The unit’s sales forecast equates to a little over 17 per cent of the €9.28 billion that analysts, on average, expect the wider Kingspan group to deliver this year.
“If Kingspan was to IPO 25 per cent of Advnsys based on peer multiples, a valuation of circa €6 billion is not unattainable,” said Davy analyst Flor O’Donoghue. “In such a scenario, a byproduct would be that the proceeds would also effectively eliminate the group’s debt.”
Mr O’Donoghue said that a stand-alone market listing of the Advnsys unit could make the case for Kingspan’s own shares to trade at over €85 a piece. That would be based on Advnsis trading on about 20 times earnings before interest, tax, depreciation and amortisation, like peers such as Eaton Corp, Vertiv and Trane Technologies. It also assumes a multiple of 12 times earnings for the group’s remaining, but larger, insulated building envelops business.
Goodbody Stockbrokers analyst Shane Carberry said that Advnsys, which is set to account for about a fifth of group earnings this year, could be conservatively valued at €6 billion in the event of its flotation.
“A prospective IPO (initial public offering) has the potential to unlock meaningful value for Kingspan’s shareholders in highly rated technology and data centre capital markets,” Kingspan said in the company statement. “It would give Advnsys a valuable sector profile in its own right, appealing to its customers and other stakeholders.”
The unit’s profits have grown in recent years, with its earnings before interest, taxation, depreciation and amortisation reaching €197 million on revenue of €1.48 billion in 2024, according to a presentation. That’s up from Ebitda of €166 million on revenue of €1.35 billion in 2023, a company presentation said.
Goldman Sachs and Bank of America have been hired to manage the potential IPO, a spokesman for Kingspan said. It is likely that other firms will also play a part in the transaction.
