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.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

'Irregular Accounting': Voluntary Suspension Of Fuji Xerox Govt Contracting

This suspension gives the Ministry of Business, Innovation, and Employment time to understand the full implications of the report from FUJIFILM Holdings into irregular accounting practices at FXNZ. More>>

ALSO:

MPI: Cow Disease Detected In NZ For First Time

MPI is responding to the detection of the cattle disease Mycoplasma bovis in a dairy herd in South Canterbury... The disease is commonly found in cattle globally, including in Australia, but it’s the first detection of it in New Zealand. More>>

South Island Flooding: Focus Moves To Recovery

As water recedes throughout flood-impacted areas of the South Island, Minister of Civil Defence Nathan Guy has praised the efforts of those who were involved in the response to the flooding... More>>

ALSO:

Superu Report: Land Regulation Drives Auckland House Prices

Land use regulation is responsible for up to 56 per cent of the cost of an average house in Auckland according to a new research report quantifying the impact of land use regulations, Finance Minister Steven Joyce says. More>>

ALSO:

Fund For PPP Plans: Govt Embraces Targeted Rates To Spur Urban Infrastructure

The government's latest response to the Auckland housing shortage will see central government and private sector firms invest in 'special purpose vehicles' to fund essential roading, water and drains that Auckland Council can't fund without threatening its credit rating. More>>

ALSO: