Johnson & Johnson Prepares to Test IPO Waters

Johnson & Johnson is reportedly readying an investors roadshow to take its commercial healthcare unit public.

According to a Sunday (April 23) Wall Street Journal (WSJ) report, sources familiar with the matter say the company could begin meeting with investors as early as Monday (April 24) as it prepares for an initial public offering (IPO).

Sources tell the WSJ the company hopes to raise at least $3.5 billion at a valuation of around $40 billion for Kenvue, its soon-to-be spun off consumer business, which sells products like Tyleon, Band-Aids and skin-care brands like Aveeno.

As the report notes, Johnson & Johnson’s attempt to take Kenvue public will be a key test for the flagging IPO market. The WSJ cites figures from Dealogic showing that traditional IPOs have raised just $2.3 billion in the U.S. this year, the worst beginning to a year since 2009.

Last year was even worse, with listings at a 20-year low as investors, scared off by inflation and high interest rates, avoided high-growth firms.

Meanwhile, companies that have already listed are struggling too, according to PYMNTS’ FinTech IPO Index, which monitors FinTech return percentages since going public.

As noted here last month, the index saw a 51% loss last year, roughly comparable with the Global X FinTech ETF 52% decline, with IPO funding dropping 68% in the same time frame.

“Of course, now with the SVB meltdown and general jitters of banks becoming more risk-averse in its wake, funding now may be even more difficult to obtain for FinTechs,” PYMNTS wrote.

Another method of going public, the SPAC — special purpose acquisition company — has lost its pandemic-era luster, as we wrote earlier this month, and now seems like “a relic of yesteryear.”

Two years ago, the number of SPAC listings topped 600 overall, but at the end of last year, depending on the vertical, listings were in the single digits.

As PYMNTS reported last week, J&J CFO Joseph Wolk addressed the upcoming spin-off when the company announced its quarterly earnings.

“We remain focused on the successful separation of our consumer health business, Kenvue, which will position both companies to be more agile, focused and competitive,” Wolk said. “We’re also expecting a number of pipeline advancements that will provide increased confidence in our pharmaceutical and med-tech businesses.”

He added that the company plans to complete the separation this year, “assuming accommodative market conditions.”

“Since the start of the year, we have been operating our consumer health business as a company within a company,” Wolk added, noting J&J has filed documents with the Securities and Exchange Commission for the planned IPO.