DataRoom AM: Qantas send-off

Qantas Airways is testing private equity interest in a partial sale of its frequent flyer division, though a float still appears the most probable divestment plan. News of interest from Woolworths, however, could throw a spanner in the works.

Elsewhere, Tony Abbott has just one big privatisation in his sights, Transurban Group’s cash needs for its Queensland Motorways bid become clearer, UGL readies for a demerger announcement and Peters ice cream may float this year.

Qantas Airways has an internal deals team assessing the prospect of selling part of its lucrative frequent flyer division to private equity, according to The Australian Financial Review. However, the division – which, at a valuation of $2.5 billion to $3.5 billion, is worth more than the entire airline – is still more likely to be partially floated on the ASX. The report also suggests big retailers such as Woolworths have shown interest in claiming partial ownership.

In the meantime, stock in the national carrier has snuck up 18 per cent in the last seven trading days as investors make heavy bets ahead of an update on its strategic review and news on possible government aid.

Deutsche Bank analysts believe Transurban Group may only need to raise $500 million to fund its bid for Queensland Motorways, according to the AFR. An auction for the $5 billion-plus toll road group is underway, with Transurban teaming with Australian Super and the Abu Dhabi Investment Authority on a bid. It will face competition from a consortium led by Hastings Fund Management and a group fronted by IFM Investors, as well as potentially meeting resistance from the competition regulator.

Pacific Equity Partners is tipped to pursue a $400 million to $450 million float of the Peters Ice Cream business this year. A float of that size would represent a profit of upwards of $150 million for the private equity firm, just two years after buying the division from Nestle. Peters could be joined on the ASX by cinema operator Hoyts Group, which is likely to chase a $700 million IPO before the end of the year.

Prime Minister Tony Abbott has ruled out the prospect of major privatisations being pursued in the near-term outside that of Medibank Private. A wave of minor sell-offs is still forecast as the Coalition seeks to mend the budget, but assets like Australia Post appear certain to wait until after the Abbott government’s first term.

An IPO of Ozsale is imminent, according to the Wall Street Journal, with the online retailer’s advisor Macquarie Capital to roadshow the business in the next fortnight. The company hopes to raise over $200 million through an ASX listing in May or June. Also in the IPO market, STAG Beef has secured $23 million from cornerstone investors ahead of finalising a float worth between $70 million and $85 million.

UGL will today confirm plans to pursue a divestment of property arm DTZ, either through a trade sale or demerger. Warburg Pincus and TPG Capital are among possible suitors, the AFR said.

AustralianSuper is interested in acquiring 50 per cent of Australand’s residential portfolio, according to the AFR. Other possible suitors for the stake include Singapore wealth fund GIC and Asian private equity firm Pacific Alliance Group. Activity on the residential front may see Australand re-emerge as a prime takeover target.

Finally, Archer Capital has claimed a majority stake in car-sharing service GoGet, according to the AFR. The deal reportedly values the fledgling group at as much as $75 million.