DataRoom AM: Package deal?

Raphael Geminder considers an IPO for Pact Group and Joe Hockey puts his GrainCorp decision on the back-burner.

Packaging company Pact Group could be looking to join the flood of listings on the ASX in the coming months, with news that billionaire owner Raphael Geminder has tapped advisors almost four years after last weighing up a listing. Elsewhere, Treasurer Joe Hockey delays a call on GrainCorp — one which will divide his party, while Wilson HTM weighs up a divestment of its broking business and the Twitter IPO has some investors over-excited.

Pact Group, Raphael Geminder, Nine Entertainment

The Australian IPO market could be set for a further boost, with billionaire Raphael Geminder reportedly chasing a float of his packaging company Pact Group.

According to the The Australian Financial ReviewCredit Suisse and Macquarie Capital have been called in to advise Pact, though it is still early days.

Geminder, who currently sits on the Carlton board, purchased Pact from father-in-law Richard Pratt in 2002. He tested the waters for a sale of a stake in the group last year to private equity groups, but a suitable deal was not forthcoming.

Back then the company hired Deutsche Bank as its lead advisor. It reportedly also hired Deutsche — and JP Morgan — when it last weighed up a float in late 2009, early 2010.

In 2009 the speculation suggested the float would value the group at $1 billion and last year a $1.2 billion valuation was mooted while it was seeking a strategic shareholder. Now, with an improving marketplace, the number could be significantly higher.

The previous attempt to list was aborted a few months after it began, with the usually private Geminder publically declaring his intention to grow the business by tapping debt markets. But the recent lift of confidence in the IPO market may have revived the plans to list the 3,000 employee-plus group.

"The float option is completely dead. It has been off the table for 18 months," he told The Australian in late 2011.

"We are a private company and intend to remain a private company. Our ability to grow using debt markets is significant and that is what we will continue to do. The market conditions are still good for that."

A float of Pact would be a further sign of a return to health for the IPO market, which is enjoying a great run of late. Among those expected to list this year or early in 2014 are Meridian Energy, Nine Entertainment, OzForex, McAleese, Spotless Group and Dick Smith.

Pact could be the largest non-government, non-private equity related float of the lot, depending on what percentage of the company Geminder sold into the listing. Back in 2009 it was expected between 50 and 70 per cent of the group would be put on the market.

Speaking of floats, and it looks like the Nine Entertainment IPO will be completed before the year’s out, with a listing date of December 9 being reported by the AFR. The float is expected to raise around half a billion dollars.

GrainCorp, Archer Daniels Midland, Air New Zealand, Virgin Australia, Joe Hockey

As we mentioned in this column leading up to the election, Joe Hockey was likely to see little in the way of a honeymoon period should he become treasurer. And so it has proven, with Hockey being required to give the government’s blessing to a number of deals as well as assessing ways to boost the Australian economy.

The first deal he has ticked off is the relatively easy decision to back an increase in Air New Zealand’s stake in Virgin Australia. We discussed the implications of the move here previously when the plan to lift its stake to 25.9 per cent was given the all clear by regulators.

The bigger decision, however, is that of consent for Archer Daniels Midland to buy the country’s largest grains handler, GrainCorp. It is a brutal test for the Liberal-Nationals relationship and one Hockey has ensured will be prolonged with a move to extend the statutory time period.

The treasurer said the backward shift in the timeline to December 17 was necessary for the new government to properly assess the issues given their complex nature and the size of the transaction.

"This will allow sufficient time for the new government to carefully consider all the relevant issues and advice from the Foreign Investment Review Board before making a decision," he explained.

It is no secret that the Nats are desperate to block the $3.4 billion deal, but it is likely to struggle given the ACCC has already signalled its support for the deal.

A Senate committee, with majority Coalition membership (and strong Nats presence), last month called for an independent review of the ACCC’s decision not to block the GrainCorp takeover. While that was just grandstanding, it is a sign of the concern within the Nationals, which have been previously made public by the party’s leader Warren Truss.

Wilson HTM, Bell Potter

The Wilson HTM board is reportedly looking to offload its loss-making broking business. According to Business Spectator’s Data Room, Bell Potter is a likely suitor with a source suggesting the Wilson broking division would be a logical move for Bell and an easy fit.

If it does assume the broking arm, it is expected Bell would pay nothing upfront and simply assume the liabilities of that division.

Back in September there were reports that Wilson would be the subject of a move from Treasury Group in conjunction with former boss Andrew Coppin. Nothing has really come of that, with both parties saying no discussions have taken place.

At that time the shares surged 10 per cent to 40 cents and its good run has continued. The company’s stock currently sits at 48 cents, giving it a market capitalisation of around $50 million.

Wilson was also the target of a painful and at times comical $24.5 million bid from Mariner late last year, which ultimately came to nothing. In other words, it’s been a long year for its shareholders, though the positive run is reason for cheer.

Twitter

Expect to regularly hear and read terms like ‘most closely watched’, ‘hotly anticipated’ and ‘most exciting’ in relation to the now confirmed float of social media group Twitter — and this column will be one of the biggest culprits (apologies in advance). The company has officially declared it will seek $US1 billion in a raising that could value the group at as much as $US20 billion.

On a side note, the stock of the unrelated Tweeter surged on the news. At one point it was up a staggering 2,000 per cent as people mistook the long dead electronics retailer (it went bankrupt in 2007) for the social media company. If you don’t laugh you cry. On the plus side it does show there’s plenty of appetite for the IPO, even if it’s hopelessly misguided.