Petrol retailer United Petroleum is pressing ahead with plans for a potential $1 billion initial public offering later this year as bankers to the float schedule meetings in Asia with prospective investors.
According to sources, the non-deal roadshow will start in Hong Kong next week and then return to Australia, underlining the company’s enthusiasm for a share market listing.
Any IPO however is likely to involve a relatively small selldown by Eddie Hirsch and Avi Silver, the South African-born entrepreneurs who founded the business 30 years ago. One source claimed it would represent less than 50 per cent although the precise structure has not been finalised.
Victorian-based United Petroleum emerged as an IPO contender in December although it may still pursue a trade sale. The founders own an extensive a property portfolio, including office buildings, and it’s unclear whether some of those assets will be carved out of the business ahead of a float.
Dataroom reported last month that United Petroleum may be restructured with its real estate and operational arms hived off into separate entities.
Credit Suisse, Morgan Stanley and UBS won the joint lead manager mandates for the listing, which is expected to have a market capitalisation of about $1bn, ranking it among the larger-scale offerings this year. The mandates followed the appointment of KPMG Corporate Finance as financial adviser in July 2013 with Hirsch and Silver instructing the firm to explore a sale or strategic alliance with an international partner.
United Petroleums’s move towards the boards comes amid soaring equity market valuations, with the low interest rate environment and falling Australian dollar fanning expectations of more large scale merger and acquisition activity.
While the IPO market has had a subdued start to the year compared to the frenetic level of activity witnessed in 2014, the pipeline of ASX-candidates remains comparatively full. More than 20 new companies are expected to debut on the stock exchange in 2015, although the size of these offerings will be smaller than the mammoth floats seen over the past 18 months.
United Petroleum’s mooted IPO also reflects the bullish run in the fuel retailers’ and suppliers’ space. The industry is dominated by Caltex, which posted a 48.5 per cent jump in net operating profit to $493 million last month, smashing management earnings guidance for 2014. Over the past year its share price has almost doubled.
A listing for United Petroleum may achieve a similarly buoyant valuation. The company operates over 30 petrol stations across Australia and also sells bulk fuel products to other independent service stations, fuel distributors, mining sites and marinas.
Extracted in full from The Australian.