DataRoom AM: Healthy listings

Healthscope is set to ramp up a bumper year of IPOs, while Deals Direct pursues an unconventional reverse listing.

The ASX could soon see its biggest listing since 2010 as the owners of Healthscope tap investment banks to assess divestment options.

Elsewhere, Deals Direct prepares for its first day on the ASX, the IPO market draws in two more candidates, rumours fly around Qantas Airways and a super merger is in the works.

Healthscope

Private equity-owned Healthscope is readying for the biggest float on the ASX since QR National in 2010, according to The Australian Financial Review.

The group’s two owners, TPG and Carlyle Group, are keen to secure a significant profit on their $2 billion investment through a $4 billion float or trade sale. Submissions from investment banks to take an advisory role on any deal have been called for by Wednesday next week, kick-starting the divestment process, the AFR said.

Healthscope is the number two hospital operator in the country after the ASX-listed Ramsay Health Care and has been linked to a float ever since the group’s chairman refused to rule out a sale back in August.

"I'm sure smarter people than me are doing the numbers,” managing director Robert Cooke said at the time.

Should it proceed, along with the mooted float of Medibank Private in the fourth quarter, the IPO market may see its best year since the GFC.

The timing seems shrewd given main rival Ramsay has been a market darling for the past two years, rising 135 per cent.

IPO market, Deals Direct

Healthscope may be the biggest name to hit the ASX in the next six months, but there is no shortage of other new IPOs to draw attention.

Among them is online retailer Deals Direct, which has pursued an unconventional reverse listing via former mobile solutions group Mnemon.

The already listed Mnemon completed an acquisition of Deals Direct on January 17 and will return to the ASX boards with a new structure today. The deal, essentially a reverse takeover, raised $6 million and values the online retailer at over $20 million.

A reverse takeover allows for the costs of a listing to be slashed, seen to be particularly valuable for companies as small as Deals Direct. It can, however, create confusion for investors and its first day of trading under a revised structure bears close watching.

IPO market, SG Fleet, RetireAustralia

The majority owner of fleet management company SG Fleet, South Africa’s Super Group, yesterday updated the market on plans to list on the ASX, confirming that it would hang onto 51 per cent of the company while Champ Ventures will offload its entire 42 per cent stake.

While a final decision is yet to be made on the float, Super Group indicated it was a near certainty as the owners plan to file a prospectus with the Australian Securities and Investments Commission on February 13, with the company slated to join the ASX in March.

The group will be chaired by a familiar face in former Metcash boss Andrew Reitzer.

The other float canvassed this week is that of RetireAustralia, the nation’s largest retirement home operator. According to The Australian, a $400 million listing is tipped for this year.

While the flurry of activity will please investment bankers, investors have every right to be sceptical. After all, when you are buying into an IPO you are purchasing shares from people who know more about the business than you do.

The need for caution was shown late last year as most floats, save for Veda Group, Freelancer.com and OzForex, failed to flatter.

Qantas Airways

Qantas Airways continues to receive plenty of advice about how it should fend off financial troubles, with the latest being assertions it should offload its freight division, according to The Australian Financial Review.

Deutsche Bank analyst Cameron McDonald reportedly views the freight division as a suitable asset to sell, potentially reaping the airline around $360 million. A weak global cargo market would, however, cap the returns Qantas could hope to receive.

Among other options are a partial float or sale of Jetstar, a sale and lease-back plan for its aircraft, a partial float or sale of its frequent flyer division and a sale of local terminals.

Analysts are eagerly awaiting February 27 when the national carrier is slated to release its half-year update and, more importantly, results of its strategic review.

HIP Super, Prime Super

Prime Super and HIP Super are in advanced merger talks to create a group housing $1.92 billion in funds under management, according to the AFR.

It is the latest sign of consolidation in Australia’s superannuation sector and will join a rural industry super fund in Prime with a health super fund in HIP.

The former has over 140,000 members and $1.2 billion under management, while HIP has over 24,000 members and $720 million under management.

A heads of agreement is expected to be finalised by the two parties next week, with the name Prime Super to be retained by the enlarged fund.