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Stelco's IPO is tough sell amid lower auto sales, trade talks in North America

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Stelco's IPO is tough sell amid lower auto sales, trade talks in North America

Canadian steelmaker Stelco Holdings Inc.'s planned IPO is facing the headwinds of lower North American auto sales and the uncertain impact of trade talks, despite the recent rebound in steel prices, Reuters reported Oct. 19.

The Ontario-based company, which was under bankruptcy protection for almost three years until mid-2017, will have to recapture investor confidence, as its new owner Bedrock Industries Group LLC is looking to raise US$150 million, according to analysts and investors.

Stelco filed a prospectus in late September to undertake an IPO to list in Canada.

If IPO is successful, it will be the world's biggest steel IPO since 2010 when Indonesia's Krakatau Steel raised US$300 million, according to Thomson Reuters data.

Stelco operates two steel-processing facilities in Ontario and is targeting the auto sector for growth with plans to expand production of lightweight, higher-strength steel. However, high automobile inventory levels and record consumer discounts may slow auto sales.