Shares of lithium producer Livent Corp. LTHM -0.18% closed flat in their public debut amid another broad decline in U.S. stock markets, an indication of the interest investors have in companies tied to the electric-vehicle market.
A spinoff from chemical manufacturer FMC Corp. , Livent shares closed at $16.97 Thursday. On Wednesday, the company said the shares would go public at $17, less than the $18 to $20 a share range Livent had initially expected.
In an interview Thursday, Livent Chief Executive Paul Graves said investors had demonstrated “fundamental support” for the IPO.
Mr. Graves said a “once-in-a-generation shift” from vehicles using internal combustion to electric batteries will propel Livent’s growth. “If you want to grow in lithium, you need to sell into growing markets,” and that means electric vehicles, he added.
Along with competitors like Albemarle Corp. , a Chilean company known as SQM, and Tianqi Lithium Industries Inc., Livent is aiming to expand as electric vehicles become more common, replacing the current global fleet of cars and trucks powered by fossil fuels.
Annual electric-vehicle sales are expected to grow at a compound rate of 32% through 2027, according to Roskill Consulting Group, an advisory firm focused on metals, minerals and chemicals. By 2040, 55% of all vehicles sold each year will be electric, Bloomberg New Energy Finance said. Livent cited both figures in a recent prospectus.
There are challenges. Livent manufactures lithium products at facilities in the U.S., the United Kingdom, China and India. However, it derives all of its lithium in northwest Argentina, where it owns concession rights.
Mr. Graves said the company wants to diversify where it gets its lithium, but acknowledged that finding high-quality, long-lasting lithium resources is “very challenging.”
Then there is the question of supply. In February, Morgan Stanley said in a note it saw “significant oversupply” of lithium in the market. As a result, shares in the publicly traded producers have fallen this year, and remain depressed.
But Mr. Graves said the company’s customers—he declined to name them—are focused on ensuring that lithium, in the right form, is available over the next few years, especially since the lithium companies in the market make slightly different products.
“What they’re looking for is certainty of supply and certain of price,” he said.
Livent is a spinoff from FMC, the Philadelphia-based chemical manufacturer that said Thursday it expects to own about 85% of Livent shares following the IPO. FMC plans to later distribute the shares to FMC shareholders, completing the separation between the companies. It decided to spin Livent off to simplify its portfolio. Mr. Graves is the former finance chief at FMC.
In 2017, Livent reported profits of $42.2 million on $347.4 million in revenue, compared with earnings of $47.1 million on $264.1 million in revenue for 2016.
Write to Micah Maidenberg at email@example.com