Chickens to In-Vitro May Revive Australia’s IPO Market
A poultry producer and an in-vitro fertilization business are among Australian companies that may revive the country’s moribund market for initial public offerings this year, lured by its strong stock market.
At least four companies, including Inghams Enterprises Pty Ltd., Australia’s biggest poultry producer, and in-vitro firm Virtus Health Pty Ltd., are seeking advice from investment banks on new share sales. If completed, those two IPOs alone could make 2013 the best year for offerings in Australia since 2010, data compiled by Bloomberg show. And more are expected, including some that were shelved last year, said Simon Cox, head of equity capital markets at UBS AG in Sydney.
“Last year the theme was ’risk averse’ and investors were crowding into cash,” Cox said. “Their rush back into the equity markets makes conditions pretty conducive for companies to consider IPOs.”
The value of IPOs in Australia last year fell to $1.2 billion, the lowest since 2001, data compiled by Bloomberg show, as concern about slowing economic growth in China and the debt crisis in Europe hurt stocks and discouraged expansion by companies.
That sentiment started to shift in the second half of the year, as investors grew more optimistic over corporate earnings and interest rate cuts by Australia’s central bank. The S&P/ASX 200 Index rose more than 13 percent in the final six months of the year, compared with less than one percent in the first half. By late December, it was 20 percent above its lows of September 2011 and in a bull market.
Gains of almost 9 percent since the start of this year indicate the benchmark is on track for its best quarterly performance since September 2009. The index today reached its highest since Sept. 8, 2008. Earnings among the index components are expected to increase 33 percent in the year through June, estimates compiled by Bloomberg show.
Consumer confidence in Australia increased this month by the most since September 2011.
“The window for IPOs, post-earnings season, is about to open,” said Michael Richardson, head of equity capital markets at Deutsche Bank AG in Sydney.
Inghams, which put itself up for sale in July, asked investment banks to submit proposals this month for an IPO to raise more than A$1 billion ($1 billion), people with knowledge of the matter said last week.
Virtus Health, the in-vitro fertilization business owned by buyout firm Quadrant Private Equity Pty Ltd., retained Morgan Stanley and UBS for a possible IPO that may raise about A$500 million, two other people said, asking not to be identified as the information is private.
Officials at Quadrant couldn’t be reached to comment on plans for Virtus, which was reported by the Australian Financial Review on Feb. 4.
An offering by either Inghams or Virtus would be the largest in Sydney since November 2010, when rail company Aurizon Holdings Ltd. raised A$4.05 billion, data compiled by Bloomberg show. Together, they would make this year the best since 2010, when companies raised A$5.1 billion.
Only one company -- a shopping center trust spun off by Australia’s biggest retailer -- has raised more than $100 million in an Australian IPO over the past 19 months, the data show. SCA Property Group raised A$472 million from new shares sold to institutional investors, as part of its split from Woolworths Ltd. in October.
Issuers that considered listings last year, including McAleese Group Pty Ltd., may add to the list this year, said UBS’s Cox. McAleese, a transport company, was considering raising as much as A$300 million, a person with knowledge of the matter said last July. A spokeswoman for the company couldn’t be reached to comment on its plans.
TRUenergy Holdings Pty., an energy producer owned by CLP Holdings Ltd., was planning an offering to raise about A$3 billion last year, people with knowledge of the matter said in June. Two months later, CLP Chief Executive Officer Andrew Brandler said the listing wouldn’t happen in 2012, and may “possibly” happen this year.
KKR & Co. was considering a sale or IPO of its Australian mining services and logistics unit BIS Industries Ltd. that may fetch as much as A$1.8 billion, people familiar with the matter said in June. The U.S. private equity firm run by Henry Kravis and George Roberts instead hired banks to arrange a A$950 million, three-year loan to refinance debt, a person familiar with the matter said Nov. 29.
Paula Hannaford, a spokeswoman for TRUenergy at Gavin Anderson in Sydney, declined to comment on the potential for the IPO to be revived.
More offerings are in the pipeline. Riversdale Resources Pty Ltd., an Australian resources company seeking to develop coking coal deposits in North America, last month appointed banks to help raise as much as A$60 million in an IPO, a person with knowledge of the matter said.
“I think we will see more activity in 2013 because the investors are certainly more receptive,” said Campbell Lobb, head of equity capital markets at Credit Suisse in Sydney by telephone. “And on the sell side, companies are more comfortable with the risks of doing an IPO.”
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