Winners are grinners as Pacific Smiles floats

DENTAL care chain Pacific Smiles lifted more than a third on its ASX debut on Friday in the second blockbuster listing for the week.

Winners are grinners at Pacific Smiles

DENTAL care chain Pacific Smiles lifted more than a third on its ASX debut yesterday in the second blockbuster listing for the week.

Shares in the company closed 37 per cent higher at $1.78 but had risen to as much as $1.80 in intra-day trade, despite the weaker market. The company had issued shares at $1.30 each in a $49.7 million IPO that had seen strong interest from investors.

The listing gave Pacific Smiles a market capitalisation of $270m.

Around 5.3 million shares or 3.5 per cent of the company’s equity changed hands on the ASX on Friday.

Founded in 2003 by Alex Abrahams and Alison Hughes, Pacific Smiles currently operates 42 centres with 200 active dental chairs across NSW, Victoria, the ACT and Queensland.

It holds about 2 per cent market share in the large and fragmented Australian dental care industry that is worth $8.7 billion and estimated to be growing at more than 6 per cent annually.

Dentists engage Pacific Smiles as the service provider, but like a surgeon they’re not directly employed. The key selling point is that dentists can focus on their craft and the body corporate carries out the administration.

The group plans to expand mainly through the opening of new centres, and is targeting six to 10 annually. It has identified more than 200 potential future trade areas.

In March the company acquired three dental practices from Medibank’s no-frills arm, AHM.

Pacific Smiles has forecast net profit of $8.9m for the 2015 financial year, up from $7.4m for fiscal 2014.

The share offer comprised a fresh capital raising and a sell-down by existing investors, including listed health insurer NIB Holdings, which held 3.9 per cent of the company’s pre-IPO capital. NIB sold its 5.3 million shares in the IPO, but continues a long-term agreement under which Pacific Smiles operates seven of its dental centres in NSW and Victoria. NIB has confirmed that there will be no change to the relationship after the sale.

Earlier this week, shares in patent attorney firm IPH lifted more than 50 per cent on their first day of trade, an indication of the growing investor appetite for professional services companies with robust earnings model and clear growth prospects.

The listings also bode well for investors in health insurer Medibank Private’s debut on Tuesday.

Business Spectator