Background

nVent Electric (NVT), a spin-off from Pentair (PNR) will begin trading tomorrow. NVT provides products and solutions that connect and protect electric equipment which improves the equipment’s utilization, lowers costs, and minimizes downtime. On a proforma basis, NVT generated $2.1BN in revenue and $440MM in EBITDA in 2017.

In the when-issued market, NVT has been trading in $22 to $26 range. It closed on April 30, 2018 at $22.04 and will begin regular-way trading tomorrow, May 1, 2018.

Valuation

NVT is trading at a price to 2018 earnings multiple of 12.5x and an EV / 2018 EBITDA multiple of 10.8x while comps (per management’s analyst day presentation) trade at 16.1x and 11.8x. Assuming NVT should trade more in-line with its comps, the stock would trade ~$26, implying modest upside from where it closed yesterday. Nonetheless, we are not overly excited about the stock in the ~$22 range, but the risk/reward would improve if there were a dramatic spin-off sell off.