The pre-New Year fireworks have well and truly been lit for the IPO market, with progress on the floats of Veda Group and Vocation the latest development amid a sea of floats. The December rush is a stark contrast to earlier in the year when IPOs were out of favour.
Meanwhile, the Medibank Private privatisation nears its next step, the fight for Warrnambool Cheese and Butter tips dangerously close to a stalemate, the massive Roy Hill iron ore project in the Pilbara edges closer to financial close and Ten Network Holdings reaches a landmark Aussie deal with Twitter.
Veda Group, Vocation, Redcape, iBuy, IPO market
The IPO market is seeing its best days in several years and a crazy end to the year is almost certain.
After the successful float of OzForex last month, the market has really taken off, with the latest high profile float, Freelancer.com, the subject of some remarkable bidding.
While Freelancer yesterday held onto its gains from Friday, credit bureau Veda Group released its prospectus, which showed it’s planning to raise $341.1 million in its IPO next month.
The raising, which will help the Pacific Equity Partners-owned group pursue acquisitions and pay off debt, values it at around $1 billion, with PEP to retain 63.5 per cent after listing.
Also releasing a prospectus yesterday was education and training company Vocation, which is looking to raise $253 million in a float of its own. The group will begin trading on December 9.
Together, the floats of Veda and Vocation will deliver tens of millions in fees to Citigroup, Macquarie Group and UBS. Indeed, the investment banks have been receiving a nice little boost in the final quarter of calendar year 2013, in what they would view as a welcome, and long overdue, change from the past five years.
Elsewhere, Asian e-commerce site iBuy is looking to raise $37 million through its December 20 listing on the ASX, which would value the company at $113 million, according to The Australian Financial Review.
Other floats to look out for pre-Christmas are Pact Group, Nine Entertainment and Dick Smith Electronics, which will arguably will be the three most closely watched of the year. Given the maturity of their businesses, they’re unlikely to match the stunning performance of Freelancer on debut, but nonetheless should be warmly received by a market that is running hot.
It appears as if December IPOs will raise over $3 billion and include the three largest of the year as the market finally puts the disappointing floats of Collins Foods, Kathmandu and Myer behind it.
Medibank Private, Newcastle Airport, Newcastle Port
The next step in the likely privatisation of Medibank Private is almost upon us, with the government set to announce the lead advisor for its scoping study of the business.
Lazard, N.M. Rothschild & Sons and Greenhill & Co are battling for the business advisor role and will engage in discussions with the Department of Finance this week
Lazard has long been considered the favourite, but the other two parties are still firmly in the running.
Herbert Smith Freehills, Gilbert Tobin and Minter Ellison, meanwhile, have settled down to scrap it out for the role of legal advisor.
Medibank Private, which is likely to reap upwards of $2 billion for the government, looks as if it will be offloaded in a dual track process that seeks to weigh up the value of a trade sale against an IPO. Several competitors would love to acquire the health insurer, but the strength of the IPO market has an early 2015 listing as the most likely option right now.
In other privatisation news, New South Wales Treasurer Mike Baird has called for expressions of interest in Newcastle Port by December 9. The sale is expected to raise at least $700 million for the state government.
That isn’t the only action around the New South Wales city however, with a 50 per cent stake in Newcastle Airport reportedly up for grabs. Newcastle City Council and Port Stephens City Council are looking to cash in with a sale of as much of 50 per cent of the asset, though the sale is restricted by the Department of Defence requirement that a non-government entity cannot own more than 50 per cent.
Newcastle Airport has recently completed a corporate restructure to pave the way for the sale, which will see it transition from a domestic-only airport to an international option for regional NSW.
The sales process is expected to begin late next year, with Australian super funds likely to be among the keenest suitors.
Warrnambool Cheese and Butter, Bega Cheese, Saputo, Murray Goulburn
Takeover target Warrnambool Cheese and Butter Factory Holdings has seen its shares hit new highs as rumours persist that Murray Goulburn Co-operative may raise its bid one last time.
As it stands, the $9.29 price for WCB shares is above the $9 a share offer from Saputo that comes with the approval of the WCB board. Meanwhile, another run-up in the price of Bega Cheese shares has seen its offer lift to $9.17 a share as of yesterday, brining it firmly back into the race.
Bega is expected to discuss its offer with WCB shareholders in Ballarat, Mt Gambier and Warrnambool in the next couple of days.
While Saputo has the board’s backing, it will struggle to get to a majority stake as Bega, Murray Goulburn and Kirin Holdings have a combined 46 per cent in WCB. Indeed, it looks increasingly likely that the wrestle for control will end in a stalemate.
Right now the only likelihood of a company sealing a majority stake is if Saputo makes a bid for Bega as well, or if Murray Goulburn and Kirin offer their stakes in WCB to Bega. For now, however, a stalemate appears the most likely outcome.
Roy Hill, Gina Rinehart, Downer EDI
Gina Rinehart’s massive Roy Hill project is ramping up towards development with the signing of $3 billion in contracts, according to The Australian.
Funding still hasn’t been sorted for the $10 billion development, but the recently signed contracts, which include a $500 million deal with engineering services firm Downer EDI, signify news on that front could be close.
Downer’s four-and-a-half-year contract for mining services will begin early in 2014, ahead of full-scale operations beginning later in the year.
The project will involve a fleet of 18 haul trucks and two excavators, and will employ over 220 people.
It’s yet another sign of progress after last week’s approval of $US694 million ($740.46 million) in financing from the US Export-Import Bank, which was seen as a lead in to the project getting the final go-ahead.
The loan had been disputed by US miners but the use of Caterpillar and GE equipment on the project led the Bank’s board to sign off on the deal.
The main contractor on the project, Samsung C&T, also recently finalised contracts worth about $2.4 billion with NRW Holdings, Forge Group and John Holland, according to The Australian.
Ten Network Holdings, Twitter
Ten Network Holdings has sewn up a deal with Twitter to broadcast video clips of breaking news and sporting events on the social networking site. According to The Australian, the deal is the first such arrangement between Twitter and a major Australian network and will allow Ten to bring its ads to the site.
It will also see the network receive money from promoted tweets.
The first key test of the agreement is likely to be next February’s Winter Olympics in Sochi. The Russian event is one of the first examples of Ten’s new focus on major events to boost ratings (KGB: Ten Network’s Hamish McLennan, November 11).
Given Ten’s struggles of late, any revenue stream it can get its hands on is worth pursuing.
Treasury Wine Estates will offer production and packaging services to Accolade Wines United States in the latest contract signed between the two firms. Accolade and Treasury also have a similar arrangement in Australia, while Accolade bottles Treasury products in the UK. Treasury said the deal allowed it to enhance its US footprint without adding capacity.
In M&A, Corporate Travel Management has acquired 75 per cent of Westminster Travel for $53 million, according to The Wall Street Journal. The ASX-listed company has entered a trading halt pending the announcement of a capital raising.
Finally, the New Zealand government has started the process to offload 20 per cent of Air New Zealand, with the shareholding to likely provide the government with a return of around $A350 million. After the sale the NZ government will still maintain a 53 per cent interest in its national carrier.