Pub floats may be a harder ask after the proposed Australian Gaming & Entertainment Limited pulled plans on Friday to float on the Australian Securities Exchange.
An international roadshow was not enough to entice investors to part with the $80 million the proposed gaming-focused company needed to fund its purchase of five Sydney pubs and launch as a listed company.
The company had intended to use the equity, along with a $43.5m debt facility, to buy four pubs — Wentworthville Hotel, Canley Heights Hotel, Croydon Park Hotel and the Beverly Hills Hotel — from the Lewis Hotel Group.
A fifth pub, the Wiley Park Hotel, was to be purchased from hotelier Les Young.
While these properties are likely to be carved up by private publicans who are hungry for gaming-oriented venues, it remains to be seen if the float plans of the Australian Pub Fund will be affected.
That Citi-advised group, backed by private equity fund MH Carnegie and businessman John Singleton, has been planning an IPO this year, and there is still hunger for a genuine consolidation play in the pub sector. AG&E, which was to be run by former casino executive Heather Scheibenstock, had planned to buy more pubs from family vendors and drive economies of scale by building up a larger poker machine empire.
But potential investors baulked at the pricing of the IPO on which CIMB and Wilson HTM acted as joint lead managers. They tried to sell 80 million shares at $1 each, 12.6 times the company’s forecast 2015 net profit per share.
They found interest in AG&E, but after talks with vendors of the hotels found the pricing could not be recut and pulled the deal.
At the more conservative end of the pub market, landlord ALE Property Group, which owns 86 freehold hotels run by ALG Group, has called in Citi and UBS for a potential refinancing deal after Moody’s Investors Service awarded the company a Baa 2 issuer rating on Thursday. The rating was assigned on the basis that ALE would undertake a refinancing of secured debt in the next four to six weeks, which would trim this debt to less than 15 per cent to 20 per cent from the current 33 per cent.