Breakfast Deals: IRESS’ British invasion

IRESS is playing it sensible as it launches its UK acquisition bid, while Monadelphous is rumoured to be sniffing around for a stake in Service Stream.

IRESS is expanding into the UK market but still playing it safe with its debt levels and capital raising. Meanwhile, Monadelphous is reportedly offering a hand to embattled Service Stream and the Future Fund could be poised for a Sydney payday.

IRESS, Avelo FS Holdings

Financial markets technology company IRESS has thrown up a $206 million rights issue to fund its charge into the UK market through a £210 million ($362 million) acquisition of Avelo FS Holdings.

The 2-for-9 renounceable entitlement offer has been priced at $7.15 a share, which is a 13.5 per cent discount on the last trading price.

Goldman Sachs is running the books for the $155 million institutional component of the raising, which should close this afternoon. IRESS is also using $171 million in existing cash and new debt, leaving it with an estimated gearing of 26.2 per cent in the end.

Between the decent discount for shareholders on the issue and the conservative gearing ratio at the end, IRESS is keeping this offer comfortable.

IRESS’ largest shareholder, market operator ASX with 19 per cent, has thrown its support behind the entitlement offer, which covers $39.3 million.

Now to the UK deal. Firstly, the sellers are Avelo’s management, Vertex and LDC, which is partly owned by Lloyds Banking Group.

IRESS chief Andrew Walsh said the Avelo purchase would expand the company’s reach beyond Australia, South Africa and Canada and improve revenue.

“This is a unique and attractive opportunity to establish scale, revenue and relationship footprint in the UK,” Mr Walsh said.

Shares issued for the entitlement offer won’t be eligible for the 90 per cent franked interim dividend from the company’s half-year results.

Monadelphous, Service Stream

Perth engineering group Monadelphous is understood to have had a chat with Service Stream about buying a stake in the troubled telco contractors, according to The Australian Financial Review.

The newspaper understands that Monadelphous brought up the topic in recent weeks with Service Stream, which is extricating itself from the national broadband network after big rollout problems.

Lend Lease is taking over control of its joint venture with Service Stream on the NBN and will complete work on its existing contracts in Western Australia and South Australia until they’re done in early next year. Then that’s it.

Meanwhile, engineering company Downer EDI has been contracted to roll out NBN cable to properties in Brisbane and Melbourne.

Future Fund, Kingsford Smith Airport

Apparently the Future Fund could be poised for a quick payday from its $2 billion deal with Australian Infrastructure Group.

The Australian Financial Review reports that listed Sydney Airport is “understood to be on the verge of reorganising its complicated ownership structure”.

Sydney Airport owns 84.8 per cent of Southern Cross Airports Corporation Holdings, which is the entity that actually owns the airport. So Sydney Airport isn’t Sydney Airport, but it mostly is. Simplification might be a bit of alright.

The Australian Financial Review says Sydney Airport is considering buying out the shareholders that speak for the remaining 15.2 per cent, including Australian super funds and offshore institutions.

The Future Fund holds 2.6 per cent from the AIX deal and, depending on valuations, the profit could be worth $150 million.

A lot of things have to happen for that to be realised. But $150 million for a few months’ work makes for a brilliant hourly rate.

Wrapping up

Speaking of airports, Leighton Holdings subsidiary Leighton Contractors has sealed a deal with Main Roads Western Australia on the price, scale and construction methods for the $900 million Gateway WA Perth airport and freight access project.

Leighton said in a statement to the ASX that the contract has a cost target of $899 million and its share will be 68 per cent.

Iron ore miner Fortescue Metals Group has proudly announced that it has awarded more than $1 billion to Aboriginal businesses, meeting its 2013 target.

“Fortescue surpassed the $1 billion mark following the award of contracts worth approximately $500million to six Aboriginal joint ventures owned by Native Title Groups to provide a range of services at the company’s accommodation villages in the Pilbara,” said Fortescue in a statement.

Congratulations all round.

While we’re talking Fortescue, BC Iron says any move to buy back the remaining 25 per cent of the Nullagine mine project from the iron ore miner wouldn’t impact its shipments.

And finally, The Australian Financial Review reports that Genworth Australia has begun to “take the temperature” of its listing potential with “pre-pre-IPO marketing”.