Anchorage to be paid $358 million in Dick Smith IPO

The private equity firm’s proceeds from the IPO exceed the planned $344.5 million share sale, which gives the retailer a market value of $520.3 million.

Anchorage Capital Partners will get $358.1 million from the initial public offering of Dick Smith Holdings Ltd, according to Dick Smith’s IPO prospectus.

Sydney-based Anchorage paid $98 million for the electronics retailer in November last year.

The private equity firm’s proceeds from the sale of Dick Smith dwarfs the $344.5 million planned IPO of the company.

Goldman Sachs Group Inc and Macquarie Group Ltd have fully underwritten the sale of 156.6 million Dick Smith shares at $2.20 each.

The shares are priced at a forward price to earnings ratio of 13 times and the IPO will give Dick Smith a market value of $520.3 million. 
Anchorage currently owns 98 per cent of Dick Smith and will retain a 20 per cent shareholding in the company after the IPO.

Macquarie and Goldman will be paid an underwriting fee of $7.6 million and a management fee of $1.9 million. The two investment banks may also be paid an additional incentive fee of $2.6 million.

Nick Abboud, the Dick Smith chief executive who Anchorage hired to turnaround the distressed retailer, has implemented a “strategic, customer, operational and cultural” series of changes, according to the prospectus. This will result in the company reporting 2014 earnings before interest, tax, depreciation and amortization of $71.8 million in 2014 compared with an Ebitda $23.4 million this year,the prospectus says.

Abboud has a 2 per cent stake in Dick Smith, which operates 359 stores.

Anchorage paid $20 million to Woolworths Ltd for Dick Smith and an additional $74 million to buy Woolworths out of an agreement that would have seen Woolworths collect a proportion of the sale proceeds when Dick Smith was sold.

The private-equity firm specializes in turnaround distressed investments and has $450 million in funds under management.

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