The IPO market could finally be ready to break the shackles as floats of two $2 billion-plus companies gather steam. Now the race is on between Genworth Australia and Spotless Group to see who hits ASX boards first.
Elsewhere, analysts ponder the next Wesfarmers divestment, Treasury Wine Estates distances itself from an auction of its US business and Nathan Tinkler’s push for the Wilkie Creek coal mine falls by the wayside.
The largest IPO of 2014 so far is being readied for June. US-based Genworth Financial will sell as much as 40 per cent of mortgage insurer Genworth Australia into a float worth just shy of $1bn. The listing will likely value the firm, which unsuccessfully pursued an IPO in 2012, at over $2bn. Commonwealth Bank of Australia and Macquarie Capital have claimed joint lead manager roles on the deal, serving alongside Goldman Sachs and UBS.
Clouding the float, however, is news of a lawsuit in the US that alleges Genworth Financial misrepresented the outlook of the Australian business to investors, according to The Australian Financial Review. The development should not impact the listing plans, though it may heighten investor scepticism about the offering.
Also in the IPO market, Pacific Equity Partners is ready to run a bookbuild on a float of Spotless Group in the next fortnight, the AFR reports. The eagerly awaited float of the $2.5bn catering firm will take a similar structure to PEP’s listing of Veda last year, with the private equity firm expected to retain a significant slice of the business to ensure stock supply doesn’t outweigh demand.
The ink has barely dried on Wesfarmers’ agreement to sell its insurance broking business and analysts are already looking for the next divestment. Senior industrials analyst Scott Marshall from Shaw Stockbroking argues the $1bn-plus Officeworks should be next on the block, but this has been dismissed by Wesfarmers boss Richard Goyder who insists it is not for sale. Around a year ago a divestment of the then-struggling Officeworks appeared a good bet, but its performance has since improved markedly.
The US business of Treasury Wine Estates has long been a drag, but the company will not bow to a push from several analysts to divest the business. The company’s new chief executive, Michael Clarke, has said all options remain on the table, but with his insistence that the “US is a key platform for our growth agenda as we go forward”, it’s hard to foresee a sale on the near-term agenda.
In resources, Nathan Tinkler’s interest in Peabody Energy’s Wilkie Creek coal mine has waned despite the asking price falling to $100 million, according to the AFR. PTT, New Hope and Yancoal are believed to have also been testing the waters on a deal, but an imminent agreement seems a forlorn hope.
It is now clear why key Envestra shareholder Cheung Kong Infrastructure is not keen to back the takeover offer of APA Group, with director Dominic Chan noting that APA had a “more volatile risk profile” than Envestra. APA needs to get CKI onside and an increase to the cash component of the $2.2bn deal appears necessary for it to get the green light.
Finally, Brambles has reiterated that it will not chase Singapore’s Goodpack on a $1bn-plus deal, though it may come back to the negotiating table should the asking price drop.