DataRoom AM: Japara buzz

The IPO market has received a welcome dose of good news as the coming float of aged-care group Japara Holdings is well received by institutions. It has many saying the IPO market is selective based on quality, but there’s likely more to it than that.

Elsewhere, National Australia Bank mulls a $1 billion divestment, BP outlines Australian expansion plans, BHP Billiton offloads another non-core asset and Archer Daniels Midland positions for a fresh bid for GrainCorp in the years ahead.

Aged care firm Japara Holdings looks set to be a rare success story when it lists on the ASX later this month after receiving funding commitments comfortably above the planned size of the offering. The buzz should see it float with a valuation of over $500 million.

For lead underwriter Macquarie Capital, the development is great news given the struggle to get IPOs to the finish line this year as first Sterling Education, and then Mantra and OzSale, fell by the wayside. As a result, analysts are saying it’s a sign of a selective market that is focussed on quality. In reality, however, it’s a selective market based on industry, as only technology and healthcare stocks have been well received over the past six months.

That bodes well for the government’s $4bn-plus float of Medibank Private as investment banks gear up to present their cases for prized advisory roles next week. The government is set to announce the “two to four” winning advisors on April 17.

In other IPO news, Evans and Partners will today run a bookbuild for debt collection firm Pioneer Credit ahead of a planned $40m float. Pioneer is expected to list with a market value of around $75m.

National Australia Bank is reportedly weighing a sale of the life insurance business of its wealth management division, MLC. According to The Australian Financial Review, Japan’s Dai-ichi Life Insurance is assessing a bid of as much as $1bn for the business, but it may have competition from rivals in Asia. Dai-ichi’s last foray into Australia was its $1.2bn purchase of Tower Australia (now known as TAL) in 2011.

Oil giant BP may have opted to close its Bulwer Island refinery in Queensland, but unlike rival Shell, it appears to have no desire to downsize its Australian assets any further. Upon announcing the closure, the British-based firm said it was “looking to buy more retail assets but (negotiations are) commercially confidential”, effectively killing off talk from earlier in the year that its retail business was on the block.

Also in resources, BHP Billiton has continued with its divestment spree, offloading a non-core mine in Western Australia just one day after reports surfaced of a possible $20bn demerger of its non-core assets.

Perth-based Cassini Resources is expected to announce today it has snapped up BHP’s West Musgrave nickel-copper project for just $250,000. The ASX-listed junior will also send $10m a year to the mining giant once production begins, along with a 2 per cent royalty on output.

In agribusiness, Archer Daniels Midland may have been upset to miss out on acquiring GrainCorp last year, but the American firm remains committed to Australia and its shareholding in GrainCorp. Reports suggest that ADM is hoping to increase its stake and it could already be positioning for a fresh takeover bid in a couple of years’ time.

Finally, TPG Capital is tipped as the frontrunner in the race for UGL’s property arm, DTZ. The private equity firm has lobbed a $1.3bn bid the way of UGL and seems likely to outflank key rival Warburg Pincus.