DataRoom AM: Hoyts chatter

Local private equity firm Pacific Equity Partners is looking to cash out of another of its investments, this time chasing a near $1 billion float of one of the nation’s largest leisure companies.

Elsewhere, BHP Billiton hits the accelerator on a $10bn-plus demerger, InterOil is rumoured to be in the sights of rivals and the auction of BG Group’s Queensland pipeline assets draws a large crowd.

Pacific Equity Partners' spree of floats is set to continue as the firm weighs an $850 million IPO of cinema operator Hoyts by the end of the year. Investment bank UBS has been hired to advise on the deal and while a trade sale, potentially to Chinese giant Dalian Wanda Group, has been considered, a float appears a much more likely outcome.

If the mooted valuation of $850m proves accurate, it would represent a strong profit on the $440m purchase price in 2007 and would mark PEP’s fourth major float in 12 months, following the successful IPOs of Veda, Asaleo Care (formerly SCA Hygiene) and Spotless Group. According to The Australian Financial Review, PEP will look to add to its advisory team in coming weeks, with Macquarie Capital and Citi in the front seat for lucrative roles alongside UBS.

BHP Billiton has set the market alight with news it will pursue a demerger of non-core assets that could be worth upwards of $10bn. For now the mining giant is keeping its cards close to its chest as to the makeup of the assets to be hived off, although aluminium, manganese and nickel assets appear all but certain to be in the mix. The announcement came after the firm was unable to drum up enough interest in its Nickel West assets in WA despite the price of the metal rising sharply this year.

The major simplification of the firm’s portfolio is an exclamation point on the divestment trend in the sector and the positive reception from investors could lead to further sales from rivals, with Sanford C Bernstein analysts telling Bloomberg Rio Tinto may consequently reconsider divestments of its aluminium and diamond divisions as well as its Canadian iron ore operations.

Bernstein analysts have also been assessing the prospect of energy sector consolidation, tipping PNG-focused InterOil will soon find itself under the close eye of a range of prospective buyers, the AFR reports. Among the possible suitors are ASX-listed Oil Search and Woodside Petroleum as well as offshore heavyweights Exxon Mobil and Total. The news comes as InterOil mulls a return to the Australian market via a secondary listing.

Also in energy, the sale of pipeline assets related to BG Group’s Queensland Curtis LNG project is heating up, with the UK firm asking for first-round bids by August 28. The $3bn-plus assets have no shortage of suitors, with AMP and Duet Group believed to be weighing offers to rival Cheung Kong Infrastructure and consortia led by Industry Funds Management, APA Group and Hastings Funds Management. Singapore Power and China’s State Grid could also be in the mix for what promises to be a strongly contested auction.

Meanwhile, Commonwealth Bank will today launch a $2bn-plus hybrid capital raising, its first such move for two years, according to the AFR. Income funds and retail investors will be the focus of the raising and it is likely to end up as the largest hybrid issue on the market.

In property, Stockland has opted to cut and run at Australand, selling its 19.9 per cent stake in the firm to new majority owner Frasers Centrepoint. The news, which will see Stockland book an $80m profit, will ensure Australand is delisted from the ASX on August 21.

Finally, Stanhill Capital has boosted its takeover offer for Robust Resources by 56 per cent after teaming up with Droxford International on the proposed deal, while former Bow Energy heavyweights John de Stefani and Steve Bizzell are hoping to replicate their success at Bow through new venture UIL Energy. UIL is slated to hit ASX boards this year through an IPO worth about $5m.