DataRoom AM: Leighton's China boost

The construction giant's planned sale of John Holland gets a booster shot from the China free-trade agreement, while mum and dad investors flock to the Medibank stock offering.

The Chinese free-trade deal is drawing mixed reviews from the gamut of impacted parties, but one company that may have cause for celebration is Leighton Holdings as it looks to accelerate its asset sales plan.

Elsewhere, Medibank Private races toward a very successful ASX debut, Alinta Energy faces a valuation quandary, Anchorage eyes off a Pacific Brands division and Estia Health receives some good news ahead of its IPO.

The final company in the race for Leighton Holdings’ John Holland division, China Communications Construction Company, is believed likely to ramp up negotiations now a free-trade agreement has been secured between Australia and China. According to The Australian Financial Review, the FTA allowance for Chinese firms to bring in workers for large construction projects could be the final piece of encouragement China Communications needs to wrap up a near $1 billion deal before Christmas.

The news comes after Leighton chose the Chinese firm as its preferred bidder last week.

While there is a prospect of an imminent deal at John Holland, the same can’t be said for Transfield Services as the AFR reports suitor Ferrovial plans to study its target’s books for three months before deciding whether to put forward a fresh $1bn-plus takeover offer.

In the IPO market, Medibank Private has drawn demand for more than $4.8bn worth of stock from mum and dad investors and once that figure is combined with the interest from institutional investors, the federal government is going to have a significant oversubscription to sort out. The development leaves Medibank almost certain to raise close to $5.5bn and list at the top end of its $1.55-$2 a share range on November 25.

The positivity around the debut has even led to grey market trade in the health insurer, with IG Markets selling CFDs at the $2.15 a share level.

The other major float to watch out for this year is the listing of Estia Health, which could raise as much as $834m when owner Quadrant Private Equity sells out. The December 5 listing is tipped to value the firm at over $1bn, with the December 3 bookbuild expected to meet strong demand after Quadrant secured several cornerstone investors in the aged-care business.

Elsewhere, IPO candidate LatAm Autos is seeking to raise $18m when hitting ASX boards in December, while Qatar-backed media company QMS may look to secure $40m in a float of its local outdoor advertising business before Christmas, the AFR reports.

In retail, Pacific Brands has confirmed its Brand Collective business -- which houses its licensed brands and footwear operations -- is up for grabs, with the AFR reporting that Anchorage Capital Partners is in the box seat on a deal for the whole division. Should Anchorage find a price to appease PacBrands, it will be hoping for a similar turnaround story to its recent success with Dick Smith Electronics.

Meanwhile, Alinta Energy’s planned $4bn sale could hit a snag in the form of valuation as its varied operations are seen unlikely to draw a lone suitor. Instead, it is believed that a piecemeal approach will be required to draw competitive bidding and the sum of the parts may fall comfortably short of the $4bn number desired by Alinta owner TPG. An auction will be held off until next year, with market expectations currently sitting around the $3bn mark.

Finally, Treasury Group and Cockatoo Coal are tipped by the AFR to launch capital raisings this week of $50m and $200m respectively, while Simonds Group stock has fallen 10 per cent on its first day of trade on the ASX, reducing its value by $30m to $240m.