Materials IPOs

This sector processes or produces the raw materials used to make everything from glass bottles to steel bridges, and is therefore essential to the global supply chain. The materials sector tends to be cyclical, mirroring the broader economy, and typically produces relatively few IPOs each year. These companies are often capex-intensive, whether it's buying and maintaining machinery or setting up a new mine.

The sector is generally exposed to commodity prices for inputs or outputs. For example, a chemicals producer or a plastic packaging manufacturer may benefit from falling oil prices, while a lithium miner would be tied to demand for electric vehicles. IPO investors should look for longstanding customer relationships, tailwinds in those end-markets, and a strong EBITDA margin. Watch out for leverage from a PE backer or corporate parent, and be aware of exposure to certain geographies and customers. Investors usually value them on EV/EBITDA.