Ventia slashes ASX IPO size
Australia's stock market was dealt another blow last week after Ventia Services Group slashed the size of its ASX and NZX IPO by 62% to A$438m (US$321m), soon after two other companies dropped their listing plans.
Its shares closed up 23.5% at A$2.10 on their ASX debut Friday. They opened at A$2.08 and peaked at A$2.14 compared to the IPO price of A$1.70.
The issue price translates into a market capitalisation of A$1.45bn and a A$2.2bn enterprise value, as well as an EV/pro forma forecast 2022 Ebita of 7.9x and an implied 2022 dividend yield of 8.9%.
This year has been extremely busy for Australian ECM and investor fatigue has set in, with many becoming very price sensitive, though bankers generally remain positive about next year's pipeline.
Having filed for an IPO of up to A$1.15bn comprising 347m to 364m shares (126m–143m primary shares/221m secondary shares) in an indicative range of A$2.75–$3.15 per share on October 26, Ventia is now offering A$374m primary shares and A$64m secondary shares, or 30.1% of the enlarged capital, at a final price of A$1.70 each.
The lower price range prompted the selling shareholders, Apollo Global Management and CIMIC Group, to call back 183.4m shares. They each currently own 47.1% of infrastructure services provider Ventia, which will fall to 32.8% after the IPO.
"Typically when selling shareholders don’t like the price or markets get wobbly, they worry about their holdings," an ECM banker said.
CIMIC said in a stock exchange filing that the listing would provide Ventia with a public market platform to enable further growth, while the proceeds will help Ventia to reduce its debt.
Barrenjoey, Goldman Sachs and UBS are the joint lead managers.
No Christmas joy
Some companies have delayed their IPO plans or are looking for a trade sale as they are being choosy amid a lack of investor demand, said Will Hamilton, chief executive at Melbourne-based Hamilton Wealth Management.
On November 10, Singapore-listed ComfortDelGro cancelled its planned spin-off of ComfortDelGro Corporation Australia for an up to A$1bn ASX IPO, while US-listed Scientific Games decided to sell its SG Lottery unit to Brookfield Business Partners for US$6.05bn last month instead of going ahead with its listing.
Australian copper, zinc, gold and silver producer Round Oak Minerals has also reportedly pulled the plug on a potential A$200m IPO after gauging investor interest.
“I do not expect there to be many large IPOs coming to market between now and Christmas," said Alex Dignam, head of ECM for Australasia at UBS. "However, I would expect activity levels to pick up quickly in the New Year.
"Leading in to Christmas fund managers are generally less likely to take on new exposures, particularly given the recent wave of IPOs and the fact that many are likely looking forward to a solid break."