Brokers working on the $1.3bn float of the Dalrymple Bay Coal Terminal are understood to have the deal covered as the book build for the IPO unfolds on Thursday.
It is understood that institutional investors from North America supported the listing, providing enough orders for coverage of the IPO.
Earlier this week, they were trying to ring fence a group of investors ahead of broker bids due on Wednesday.
The so-called ‘ring fencing’ process involves brokers locking in a group of investors for a particular amount of stock for a certain price.
The prospectus will be lodged on Friday for the initial public offering of the Queensland-based coal export facility.
The float appears to have got away despite local institutional investors expressing concerns about trade tensions with China, concerns surrounding state government regulation on the determination of customer pricing, high debt levels and exposure to coal, which is out of favour due to environmental concerns.
It is understood that advisers to the terminal’s owner, Brookfield, have spoken to 30 institutional investors in recent days ahead of the listing in an effort to gain their support.
The DBCT is one of Queensland’s major metallurgical coal export facilities and handles about 20 per cent of the world’s seaborne metallurgical coal trade.
Private equity firm Brookfield is now retaining 49 per cent of the terminal, which is expected to see institutional investors potentially warm to the offering.
A 7 per cent yield was expected to attract retail investors interested amid a low interest rate environment.
Shares are being sold at $2.57 each and the size of the IPO will be $656m.
This includes a $128.47m sized commitment from the Macquarie Capital-advised Queensland Investment Corporation Future Fund which will see it gain an interest in 9.99 per cent of the company.
It is understood that QIC was paid a 4 per cent fee to offer upfront support.
The company’s market value will be $1.286bn and net debt will be $1.788bn, with the company’s enterprise value to be $3bn.
Attractive to funds is that take or pay contracts for the terminal with its mining customers are in place for about five years and that they will take on most of the risk from the asset.
Dalrymple Bay Coal Terminal will start trading on December 10.
Working on the float is Merrill Lynch Equities, Citi and Credit Suisse as lead managers.
Co-lead managers include Wilsons, Ord Minnett, Bell Potter and Morgans.
Brookfield gained control of the terminal during the financial crisis in 2009 when it embarked on a $1.8bn recapitalisation of Babcock and Brown Infrastructure, essentially consisting of the DBCT.
The book build will close on Thursday night, North American time.
Private equity firms not interested in Domain
The $1.7bn Domain Group is said to have been shopped to private equity firms far and wide to test their interest in taking a stake in the business. None appear keen, sources say.
Privatisation of NZME on cards amid ‘clickbait’ complaints
There are rumblings across the Tasman over the state of New Zealand’s media industry, and some wealthy Kiwis are said to be plotting to do something about it.