Breakfast Deals: Nine's IPO advance

Nine Entertainment’s owners are reportedly considering a sharemarket float before the end of the year. The drums for an IPO resurgence are growing stronger with Steadfast floating, OzForex planning to and a couple of property trusts moving as well. Meanwhile, the new federal agriculture minister has hinted that the government has favourable ears to the GrainCorp takeover, and Macquarie Generation’s sale is up and running.

Nine Entertainment, Apollo Global Management, Oaktree Capital

The owners of Nine Entertainment are reportedly looking at a $1.2 billion float on the Australian Securities Exchange before the end of the year.

The Australian brings word from sources that the TV network is “close to mandating banks to handle the initial public offering”, which could be set for November or December.

The newspaper says Macquarie and UBS are strongly favoured to win some business, though it isn’t official. None of it is.

This news comes in the wake of a disappointing float of iSelect, which Nine used to own a stake in via its Ninemsn joint venture Mi9 with Microsoft.

But we’ve had a successful IPO for fertility treatment company Virtus Health, bankers for insurance broker Steadfast Group were collecting bids for its float last night and a handful of other players, including property trusts and OzForex, are making plans of their own.

Ever since Apollo Global Management and Oaktree Capital started putting the pressure on Nine’s previous owner, CVC Asia Pacific, for a debt-to-equity swap, it’s always been likely that Nine would be floated onto the ASX once again. This would deliver a windfall of cash to the TV network’s former lenders, now current owners.

Up until now though, most of the noises out of Nine have pointed towards an IPO in 2014. If this latest report ends up being on the money, Apollo and Oaktree will be launching Nine onto the ASX less than a year after winning the network.

And that’s after spending a year wrestling Nine away from CVC.

A float of $800 million to $1.2 billion would provide Apollo and Oaktree a window to sell as much as half of their stakes in Nine. This proposal wouldn’t be a full sale.

That would mean Nine shares would trade on the ASX under the weight of a looming block sale from a big shareholder.

That can contribute to a share price remaining subdued – just look at Woodside Petroleum and Royal Dutch Shell.

And sometimes that dynamic does stuff all. Just look at the steady rise of Aurizon, formerly known as QR National, since it’s IPO in late 2010.

The stock is up 60.2 per cent despite the constant but diminishing presence of a big seller – the Queensland government – on the register.

Steadfast Group, OzForex, Pacific Retail REIT, Centuria Property Trust

Alright, that’s about enough speculation for Nine Entertainment. Steadfast Group’s float is actually happening, like… now!

Reports point to a fully covered $334 million raising at $1.20 a share conducted by JPMorgan and Macquarie Capital.

The Australian Financial Review understands that the Steadfast board, led by former QBE Insurance boss Frank O’Halloran, was considering lowering the issue price to $1.15 a share to increase the likelihood of a strong debut.

Meanwhile, online foreign exchange company OzForex, which is backed by Macquarie Group and Carlyle Group, is reportedly thinking about an initial public offering of its own to the tune of $500 million.

Sources that have spoken to Bloomberg indicate the OzForex has been meeting investors to check out the interest in a float that could even take place this year.

A full sale to a single buyer is also being considered.

This comes as Pacific Retail REIT and Centuria Property Trust are reportedly looking at their own float plans worth a combined $610 million.

GrainCorp, Archer Daniels Midland

The federal government has given off a pretty strong signal that it’ll approve the $3 billion-plus takeover of GrainCorp by American giant Archer Daniels Midland.

New agricultural minister Joel Fitzgibbon, a staunch supporter of returned prime minister Kevin Rudd, told a national grains conference yesterday that he favours free markets and welcomes foreign investments, according to The Australian.

“I am a believer in competition in the market and that we should embrace foreign investment,” Fitzgibbon said.

While he wouldn’t give an explicit commentary, he said, “That might give you some hint of my initial views on this issue.”

Macquarie Generation

In New South Wales, Treasurer Mike Baird kicked off the sales process for Macquarie Generation without any real surprises. This has been well flagged.

Expressions of interest from bidders are due by August 19 and the government is set to establish a data room in the following months in the hope of getting a sale done by January, or early in the New Year.

Expect a steady stream of big names, both foreign and domestic, to find their way into the press.

CFS Retail Property Trust Group, Commonwealth Bank of Australia

Speaking of big names, US giant Simon Property Group has refused to rule out making a run for CFS Retail Property Trust as Commonwealth Bank of Australia pulls out of its property platform.

After handing down second quarter results yesterday the company’s billionaire chief executive David Simon was sure to emphasise that it’s looking globally, and while CFS Retail is only one of several opportunities, it’s on the list.

Simon Property Group is the largest publicly traded real estate company in the US. Closer to home, Dexus Property Management is being touted as a potential bidder for CFS Retail, having already taken a 15 per cent stake.

Wrapping up

In line with this morning’s Breakfast Deals lead about improving IPO sentiment, the world’s largest electronic ‘data room’ provider Intralinks is getting excited about the global level of deals activity.

The company’s indicator for global activity jumped 24 per cent in the second quarter from the previous quarter, which is the largest increase since the collapse of Lehman Brothers.

In construction, industry giant Leighton Holdings has picked up a serious contract with Wynn Resorts to build a $2.8 billion contract to build a luxury casino in Macau.

Chief executive Hamish Tyrwhitt said the project is part of Leighton’s strategy of getting more business out of Asia. Building casinos is a good way to go about it.

And finally, boutique investor Gresham Partners is getting out of the private equity game, according to The Australian Financial Review.