The IPO Buzz: UL Solutions (ULS) Prices Upsized IPO at $28 – Near the Top

Now that’s an upsizing: UL Solutions (ULS) increased its IPO’s size by 20 percent on Thursday night, April 11, 2024, and priced the deal at $28.00 – near the top of its range – to raise $946.4 million. The company’s parent, ULSE Inc., sold 33.8 million shares – up from 28.0 million in the prospectus.

UL Solutions’ stock ended its first day of trading at $34.94 – up $6.94 for a gain of 24.79 percent – in its debut on Friday, April 12, 2024, on the New York Stock Exchange. Volume was 14.94 million shares. The trend was clear from the start. UL Solutions’ stock opened on Friday at $34.23 – up $6.23 or up 22.25 percent – in its debut on the NYSE. (Editor’s Note: This story was updated Friday afternoon on April 12, 2024, to add details on the debut of UL Solutions’ stock on the NYSE.)

Goldman Sachs and J.P. Morgan led the joint book-runners’ team, which included BofA Securities, Citigroup, Jefferies and UBS Investment Bank.

ULSE Inc. (“UL Standards & Engagement”), the company’s sole stockholder before the IPO, sold all 33.8 million shares of Class A common stock in the IPO.

Cornerstone investor Norges Bank Investment Management, a division of Norges Bank, indicated an interest in buying up to $75 million of stock.

A Big Brand

The UL brand is a household name. It’s one of the most iconic brands in the world.

The “UL” in the company’s name stands for Underwriters Laboratories, which began testing electrical products for fire risks during the 1894 World’s Fair in Chicago.

UL Solutions provides testing, inspection and certification services on electrical consumer products to more than 80,000 customers worldwide. The company also offers software and advisory services. UL Solutions Inc. employs more than 14,000 people.

Dividends and Profits

This IPO also has dividend appeal. UL Solutions says in the prospectus that it intends to keep paying a quarterly cash dividend on its common stock, the prospectus says. Beginning in 2024, the company increased the regular quarterly dividend to 12.5 cents per share, “resulting in a $25 million dividend in the first quarter, which we paid in March 2024,” the prospectus says.

The quarterly dividend of 12.5 cents per share works out to 50 cents per share on an annualized basis – for a dividend yield of 1.8 percent if the IPO is priced at the $27.50 mid-point.

IPO investors liked the black ink on the bottom line. UL Solutions earned net income of $296 million on revenue of $2.62 billion for the 12 months that ended Sept. 30, 2023.

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