Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Next Capital pulls Hirepool IPO on tepid support

Next Capital pulls Hirepool IPO as fund managers baulk at after-market support

By Jonathan Underhill

June 24 (BusinessDesk) - Hirepool's 64 percent owner, Australian private equity firm Next Capital, has abandoned plans to sell shares in a $262 million initial public offering after concern from institutional investors that on market support for shares of the unprofitable equipment rental company wouldn't be strong enough.

Next and fellow shareholders Macquarie Group holds 21 percent. Hunter Powell Investments were to have reduced their combined holdings to between 20 percent to 35 percent of the company in the IPO of up to 120.1 million new shares and 83.5 million existing shares at between $1.10 and $1.50 apiece. Some institutions are understood to have struggled to put even a 90 cent valuation on the stock.

There had been good demand from retail investors but institutional investors weren't confident there would be enough support for the stock after it listed, especially with Next remaining a relatively large shareholder. The IPO would have come amid a swathe of stock sales, including Serko, Gentrack, ikeGPS and Scales Corp, giving investors plenty of choice on where to put their funds.

Existing shareholders are happy to remain owners of Hirepool, given the outlook for the economy and the business.

Hirepool is projecting profits from 2015, after years of losses, having squeezed out costs since buying major rival Hirequip out of receivership last year and using its initial public offering to pay down debt, according to its prospectus.

Hirepool is forecasting a net profit of $25 million for the year ending June 30, 2015, from a pro forma loss of $17.8 million in the current year, according to the company’s prospectus. After adding back finance costs, depreciation and amortisation of Hirepool and Hirequip, pro forma aggregated earnings before interest, tax, depreciation and amortisation are forecast at $34.5 million this year and $60.5 million in 2015.

Hirepool alone has posted net losses each year from 2009, according to the prospectus, mostly reflecting finance costs. Hirequip achieved a profit in 2012 and for the 10 months to May 6 2013, following three years of losses, the figures show.

Following the merger, Hirepool is the nation’s only generalist hire equipment company, although it has only about 19.6 percent of the market based on last year’s application to the Commerce Commission to buy Hirequip. Those figures included an estimate that the building hire industry generated $780 million of equipment hire revenue in 2013, while Hirequip’s revenue was $153 million.

The company had planned to cut interest bearing debt to $85 million on listing from $203.6 million at June 30.

Deutsche Craigs, Macquarie Securities (NZ) and UBS New Zealand were joint lead managers with ANZ Bank New Zealand as co-manager for the sale. Advisers were Cameron Partners.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Food: New National Science Challenge To Launch Research

What if New Zealand developed the next generation of foods that will help consumers maintain their health and protect them against diabetes, irritable bowel syndrome or chronic allergies? What if we could answer some big science questions – use that knowledge to develop foods with proven health benefits and boost our economy at the same time? More>>


Trade & Retail: Chinese Disaster Spells Quiet Season For NZ Fireworks Sales

In August, two massive explosions at a warehouse at the port in the port of Tianjin, Northern China, killing more than a hundred people and devastating large areas of the city. In the wake of the disaster, Chinese authorities rushed to regulate the distribution of all dangerous goods... More>>



Oceans: NOAA Declares Third Ever Global Coral Bleaching Event

As record ocean temperatures cause widespread coral bleaching across Hawaii, NOAA scientists confirm the same stressful conditions are expanding to the Caribbean and may last into the new year, prompting the declaration of the third global coral bleaching event ever on record. More>>

Scoop Business: A Decade Of Government Pre-Seed Investment

More publicly-funded science is being commercialised after a decade of government ‘pre-see’d investment, according to an independent review. More>>


Solid Energy: Plan To Shut Unprofitable Huntly East Mine

Solid Energy, the state-owned coal miner in voluntary administration, plans to shut down its unprofitable Huntly East mine and lay off 65 staff after deciding the site stands "no chance whatsoever" of finding a buyer. More>>


E Tū: Merger Creates NZ's Biggest Private Sector Union

E tū has been created by the merger of the Engineering, Printing and Manufacturing Union and Service and Food Workers’ Union. It represents more than 50,000 working New Zealanders in industries as diverse as aviation, construction, journalism, food manufacturing, mining and cleaning. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news