Private equity major KKR has pulled the float of pubs group Australian Venue Holdings after the retail component of the IPO got the wobbles following the NSW government’s decision to extend COVID-19 restrictions for another week.
Brokers for the float, Goldman Sachs and Citigroup, sent potential investors a book update on Thursday afternoon, saying expressions of interest from institutional investors suggested the float would exceed its $352m target.
The message was sent as AVC’s retail brokers – Ord, Morgans and Canaccord Genuity – were due to lob bids into the $2.33 float, priced at 15-times AVC’s forecast profit for the 2022 financial year, and implying a market capitalisation of about $900m on listing.
But a new COVID-19 case emerged in NSW last week and, despite extensive investigations, the state’s health department is still struggling to work out how the initial case, a man in his 50s, caught the infection, suggesting other cases could still be loose in the community despite the ramping up of testing.
On Sunday NSW Health extended most restrictions, due to end on Monday, for another week – limiting visitors to 20 per household, compulsory masks on public transport, in theatres, aged care and hospitals.
A ban on drinking while standing at indoors venues has also been maintained, and dancing is banned at hospitality venues and nightclubs.
While the bans are relatively minimal by the standards of snap lockdowns in other states, they have been enough to make retail brokers and punters nervous and KKR is understood to have pulled Monday’s bookbuild, opting to keep AVC in private hands for the foreseeable future.
KKR was not selling any shares into the IPO, and is believed to be keen to press on with plans to spend up to $200m on a fresh acquisition spree for the cashed-up hotel group, which already owns 165 venues in Australia and ten in New Zealand.
According to analyst reports ahead of the bookbuild, AVC is forecasting earnings before interest, taxes, depreciation and amortisation of $207m in fiscal 2022, a big lift from EBITDA of $127.5m last financial year as the pandemic closed venues across the country.
The decision comes as Woolworths prepares market for a float of its hotels and bottle shops spin-off Endeavour Drinks.
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