Shares in insulation and building materials manufacturer Kingspan Group soared today after it said it is considering a potential flotation of its ADVNSYS business, which provides infrastructure for data centres.
Co Cavan-based Kingspan said it had begun working on an initial public offering of 25% of its data-centre focused ADVNSYS business.
The initial public offering of ADVNSYS, which produces bespoke critical infrastructure such as ventilation and daylighting, would take place in Amsterdam, likely in the first quarter of next year, CEO Gene Murtagh told analysts on a conference call.
Kingspan would control 75% of ADVNSYS after the flotation and would continue to consolidate its revenues and earnings, Gene Murtagh said. Two global investment banks have already been appointed to jointly lead the process, he added.
"If that was successful, both Kingspan as the parent and ADVNSYS would end up essentially with zero debt, and obviously huge runway for both the businesses to take it from there," the CEO said.
ADVNSYS recorded earnings before interest, taxes, depreciation and amortisation (EBITDA) of €197m last year and that could hit around €300m next year, Mr €Murtagh said.
With rivals servicing the data centre industry trading at 20 times earnings, that could imply a valuation of over €6 billion, CITI analysts said in a note.
Goodbody stockbrokers in a note said trading multiples in the sector "can be far in excess of 20x EBITDA."
Kingspan's ADVNSYS business was previously know as its Advanced Building Systems segment.
Kingspan said that with its "innovative product suite and global scale", ADVNSYS is uniquely positioned to deliver a growing proposition for customers in the rapidly expanding AI and data centre market.
The company said a prospective IPO had the potential to unlock meaningful value for Kingspan's shareholders in highly rated technology and data centre capital markets.
"It would give ADVNSYS a valuable sector profile in its own right, appealing to its customers and other stakeholders," the company added.
In a short statement, the company said it will provide a further update in due course.
Kingspan shares moved higher in Dublin trade today.
