The $500 million aged care provider Japara is powering towards an April float as it considers dropping its back-end bookbuild in favour of cornerstoning a raising of up to $450m after a rush of demand.
Adviser Macquarie Group has been inundated with calls from about 20 institutional investors chasing allocations.
A prospectus was set to be lodged Monday but Macquarie and the Japara executive will today decide whether to cornerstone the raising, which would instead see them issue pathfinders to institutions over the weekend.
Fund managers are understood to have been lobbying Japara’s directors – as well as Macquarie -- to try to get in on the raising. The huge demand for cornerstone stakes comes on the back of a successful pre-marketing Macquarie analyst roadshow across the east coast last week. And the fact that the Japara directors are well known to many fund managers has also helped.
The institutional appetite for Japara’s raising amid the collapse of hotelier Mantra Group’s $500m IPO this week shows investors are still open to backing the IPO pipeline but are being much more selective than during the pre-Christmas feeding frenzy.
Japara is in the sweet spot of “aged care” and is considered to have big growth potential. Japara, which has a valuation of about $500m before $150m in debt and offer costs, would be the first listed pure-play aged care offering. Listing is slated for 28 April.
Japara is targeting a raising of $350m and $450m, depending on the size of the primary selldown by existing Japara shareholders. Post-float Japara will have $150m issued in new equity, and the remainder will be sell-down equity.
Japara shareholders will be asked to vote on a company restructure next month that 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 substantial holdings in the merged entity – Japara Healthcare.
It is understood the four existing shareholders in the operating company are leaving at least $80m in the company, representing 40 per cent of the value of their holdings. Given the owners will want to underpin the value of their retained stakes it is understood they are being pretty reasonable on price.
Major shareholders in Japara Holdings include managing director Andrew Sudholz and director Julius Colman, who each had a 31.24 per cent stake at June 30, according to ASIC. However, their stakes will be diluted through the restructure and new equity raised.
Japara, which 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.
Japara Healthcare’s board will be headed by Fairfax director Linda Nicholls, who used to chair Healthscope and Australia Post. Other members include AustralianSuper director Tim Poole, Macquarie Atlas Roads director Richard England and former APN Property Group chief executive David Blight.
Fund managers are understood to have been lobbying Japara’s directors – as well as Macquarie -- to try to get in on the raising.
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