Woolworths is understood to have pushed back until next year its initial public offering plans for its $2 billion petrol stations division as markets remain volatile and Viva Energy continues to trade below its IPO price.

It comes as Property Exchange Australia looks set to price at the bottom of its IPO range today, should the deal get away, and aggravated investors demand answers from investment banks working on Coronado Global Resources as to why the company has traded poorly after Tuesday’s listing.

Back in August, Woolworths had pencilled in November for its listing but now that is now understood to be off the table.

The supermarket giant is believed to have wanted a higher price for its business than Viva Energy’s, which priced at 6.5 times its earnings before interest, tax, depreciation and amortisation.

Since Viva listed as a $4.86bn fuel business in July at $2.50 a share, the market value has been in decline, closing last night at $2.10.

According to the Australian Institute of Petroleum the national average price of unleaded petrol increased 1.8c in the week to October 22 to $159.3c a litre — the highest level for over a decade.

With the rising cost of fuel, choppy sharemarket conditions and the division facing headwinds for its performance in the coming months, it makes an IPO of the Woolworths petrol business challenging.

Woolworths owns one of Australia’s leading fuel and convenience retailing networks with 534 sites, fuel sales volumes of 3.6 billion litres and annual revenue of $4.8bn, reporting $168m in annual EBITDA last financial year before striking a new fuel supply agreement with Caltex, which is expected to create $80m worth of annual pre-tax earnings benefits.

The IPO plan next year will also no doubt be a tough sell for Woolworths advisers Morgan Stanley and UBS, with Australian investors, starting to lose patience with banks spruiking large deals that fail to perform in the aftermarket, and the vendors for whom they are acting for.

On Coronado, frustration exists about the mixed messages on the float, which at one stage suggested demand was strong even though it only just got across the line with heavy reliance on offshore hedge funds.

There have also been suggestions that at least one bank involved bought up stock to ensure the IPO got away, with UBS said to be telling its private equity client EMG it should hold off on the listing despite its strong determination to proceed.

Market analysts say the disappointing performance of Viva Energy and Coronado Coal — the two largest floats of the year — and market volatility meant launching an IPO in the next six months would be a near impossible task.

UBS and Deutsche advised on Viva Energy, while Coronado Coal had Goldman Sachs, UBS and Credit Suisse on the transaction.

It will be interesting to see whether Pexa proceeds with its float plans, although indications from Australian investors in recent days is that they are interested in the IPO.

The electronic property settlements provider is selling shares at between $13.60 and $15.80 each, valuing the business at between $1.8bn and $2.1bn.

Prospective investors yesterday said they were being told it would likely be priced at closer to $13.60 a share on the back of market volatility as it hopes to raise between $753m and $862m.

Working on the float is Macquarie Capital and Morgan Stanley as lead managers while co-lead managers are Bell Potter Securities and Morgans.

Pexa, which is owned by various investors including Link Group and Macquarie Group, plans to raise between $753m and $862m ahead of its slated market debut on November 19.

Extracted from The Australian

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