AG E in talks on plan to raise $80m

Pub company closes off a bookbuild, in talks with investors ahead of ASX listing.

Pub company Australian Gaming & Entertainment was in talks with investors about its plans to raise $80 million last night after it closed off a bookbuild run by CIMB and Wilson HTM.

The process was kicked along by three institutions stepping up to support the Sydney-focused gaming pub owner that is planning to list later this month. Wilson HTM was also providing solid bidding on the retail front.

The bookbuild came after a national and international roadshow to draw investors to back the operator of gaming-oriented pubs in Sydney.

The group plans to pick up four pubs from the Lewis Hotel Group and another from hotelier Les Young, taking the portfolio to about $110m, and giving it some cash to buy more poker machines to boost earnings.

AG&E is to be steered by veteran casino executive Heather Scheibenstock, who has flagged opportunities to acquire more pubs over the next year.

The company was at least partly the brainchild of JLL’s national director, pub investment sales, John Musca, and its success is being watched closely in the industry.

Going into the bookbuild the offer price was set at 12.6 times the company’s forecast 2015 net profit per share, leaving some room for finessing if required.

While the pub company may be headed for a listing on the Australian Securities Exchange, hotelier Mantra Group, which pulled its UBS and Macquarie Capital advised float in March, is viewed as more likely to fall into the hands of a private equity player.

DataRoom has been told that the serviced apartment and accommodation provider is locked in talks with Archer Capital, which has chased the $500m UBS and CVC Asia Pacific-owned business since it was first put on the block in mid-2012.

Mantra owns about 115 properties with almost 12,000 rooms across Australia, New Zealand and Indonesia; it generates about $450m in revenue annually, and earnings of about $62m.

As a measure of how serious this bid may be, the pricing suggested may top the last offer to listed fund managers, which represented a price-to-earnings ratio of about 12.7 times.

It remains to be seen if Mantra chief Bob East, who has flagged another run at a listing later this year, and his co-owners will sell this time.

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