BIS Industries gets cool reception
Fund managers who have been briefed on the planned IPO of BIS Industries say they are sceptical of float hopeful’s ability to sustain a competitive advantage.
One fund manager says the sponsoring brokers for the float of the mine-site trucking business – UBS, Goldman Sachs and Bank of America Merrill Lynch -- are “pushing uphill in terms of sentiment”.
“They are trying to distance the company from mining services but that’s where it sits and it’s an industry under a lot of pressure at the moment,” the fund manager says.
Management has been promoting BIS Industries as an infrastructure and logistics business, comparable to Aurizon, Asciano and Qube. The float’s brokers are aiming to get the IPO away before Christmas.
Following the marketing run this week, UBS, BAML and Goldman will host lunches with management and fund managers on Monday and Tuesday.
BIS is unlikely to achieve the upper end of valuations, particularly given the question mark around the company being able to sustain a competitive advantage with its specialist haulage trucks, a second fund manager says.
He says the company had greater exposure to the production side of mining services – rather than capital expenditure, which has taken a hit.
BAML has set an equity value of $850 million to $1 billion for BIS Industries, while UBS has set an $800 million to $1.1 billion equity value. Goldman has put an equity value of roughly $700 million to $1 billion. The IPO is expected to raise up to $500 million.
Analysts have valued the company at roughly 8.5 to 10 times EBITA, which is tipped at $165 million for FY14.
The size of the stake to be sold by major shareholder private equity giant KKR & Co and the final structure of the offer will be set after response to marketing this week.