Macquarie Group analysts will run an east coast IPO roadshow this week for the float of $500 million aged care provider Japara Holdings, ahead of a $300m to $400m equity raising tipped for early next month.
The analysts will visit fund managers in Sydney and Melbourne while the form and pricing of the IPO are finalised. The market appears to be favouring back-end bookbuilds and indicative price ranges, and Japara is likely to follow suit.
CBA Equities and one other broker are understood to have been added to the ticket to assist sole lead manager Macquarie Group on Japara, the country's fourth-largest aged-care provider.
Japara’s analyst roadshow comes after a successful pre-IPO visit to Asia last month. Macquarie Group and Japara chief executive Andrew Sudholz courted institutional investors in Hong Kong, Singapore and New Zealand after a strong reception from domestic institutions.
Advisers are working to an indicative early April bookbuild date and a May listing, amid a growing pipeline of IPOs post earnings season.
Macquarie is likely to tap the market for between $300m and $400m. Post-float Japara will have $150m issued in new equity, and the remainder will be sell-down equity, with owners and management to make partial or full exits. Major shareholders in Japara Holdings included managing director Sudholz and director Julius Colman, who each had a 31.24 per cent stake at June 30.
After the terms of the IPO are bedded down, Japara shareholders will be asked to vote on a company restructure Macquarie is drawing up. The restructure of Japara would merge the operating company, Japara Holdings, with Japara property trust, which it manages. Under the restructure, management would partially sell down their stakes but emerge with a substantial holding in the merged entity.
Japara, which has a valuation of about $500m before $150m in debt and offer costs, is likely to be priced at least in line with the broader aged-care sector's multiple of 10-times current earnings before interest, tax, depreciation and amortisation. While it has no listed Australian comparables, it is being compared with NZ's Ryman Healthcare and Summerset Group, which are enjoying high trading multiples. Ramsay Health Care’s stellar forward trading multiple of 30.4 times earnings is also likely to help Japara’s cause.
Japara, which has 3000 beds with around 3700 staff and owns and operates 25 aged-care sites and five retirement homes in Victoria, NSW, South Australia and Tasmania, is being pitched as a private hospital-style business with a growing asset base and secure and rising government revenue streams. It also has a low regulatory risk profile. Other key selling points include the uncapped demand for health and aged-care services and a booming ageing population.
Non-executive directors Allan Reid and Robert Peck held 19.52 per cent and 15.62 per cent respectively at June 30, according to documents lodged with the Australian Securities & Investments.
Bookbuilds that are set down for this month include the $NZ808m IPO of up to 49 per cent of the New Zealand government’s Genesis Energy, which is heading for a dual listing on the ASX on April 17.
On Friday, investors will be bidding into the $155m float of property fund manager 360 Capital Group. Meanwhile, the $500m float of hotelier Mantra is to be shopped to investors in Asia and Europe next week.
Last week saw the first post earnings season IPO fail to get away. Childcare roll-up Sterling Early Education could not raise sufficient funds for its $200m bookbuild.
(Reporting by Amanda.Saunders@businessspectator.com.au
Editing by Miranda.Maxwell@businessspectator.com.au )