SHARES of Haleon, a company to be spun off from British pharmaceutical giant GSK, will begin trading on Monday (Jul 18) in what will be the largest initial public offer (IPO) on the London Stock Exchange in over a decade.

Analysts expect the company to have a market capitalisation of as much as £45 billion (S$74.7 billion), which would well exceed the previous record IPO in the UK held by mining conglomerate Glencore’s £38 billion listing in 2011.

When the demerger from GSK finally takes place, Haleon will be a standalone global leader in consumer healthcare, covering oral, respiratory and digestive health, pain relief and vitamins, minerals and supplements. 

The company’s brands include Sensodyne toothpaste, the anti-inflammatory cream Voltaren, and painkillers Panadol and Advil. Brian McNamara will continue to lead Haleon as its chief executive officer, having done so as a GSK division since 2016. Former Tesco chief Dave Lewis is its non-executive chairman.

According to the prospectus for the share offer released in June, Haleon’s revenue of £2.63 billion in the first quarter of 2022 was up 13.9 per cent from the same period last year. Pre-tax profit jumped by 33.9 per cent to £465 million.  In the full year ended Dec 2021, revenue fell by 3.5 per cent to £9.55 billion but pre-tax profits rose by 2.8 per cent to £1.64 billion. 

“The business is well-positioned to build on its track record and grow sustainably ahead of the market. The fundamentals for the £160 billion consumer healthcare market are strong,” GSK said in a statement. 

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Haleon has earlier disclosed that it would seek to generate medium term annual organic revenue growth of between 4 per cent and 6 per cent. It will employ 23,000 people in 100 different countries.

Once the demerger is done, GSK shareholders will own 54.5 per cent of Haleon, with GSK owning roughly 6 per cent and controlling another 7.5 per cent.

Analysts have flagged, however, that with a recession looming and a relatively weak UK stock market, Pfizer - the US pharmaceutical company - could decide to reduce its stake of 32 per cent, although it has agreed to be “locked in” until this November at the earliest.

Barclays Bank analysts are concerned that Haleon has net long-term debt of £10.3 billion, equal to 38 per cent of shareholders’ funds. Hargreaves Lansdown, a broker, noted that the consumer health business is relatively stable and that Haleon “can service a large debt pile”.

GSK chief Emma Walmsley said that the demerger would boost investment and research in the company’s vaccines and pharmaceuticals, with current and future products covering cancer, infectious diseases, HIV and respiratory medicine.

She has promised a “new era of growth” for GSK with a sales growth target of over 5 per cent and adjusted operating profit growth of over 10 per cent. The aim is to achieve sales of more than £33 billion by the end of this decade, compared with £24 billion (excluding consumer health turnover) in 2021.

Singapore is expected to continue playing a major role for both GSK and Haleon as their regional headquarters for emerging markets and the Asia-Pacific, said a GSK spokesperson.

“We are one of the biggest contributors to Singapore’s biomedical sciences industry with investments in excess of S$1.5 billion,” he said. GSK currently operates 2 global manufacturing supply sites and a vaccines manufacturing facility here.