Britain’s Permira gets a thirst for Accolade Wines

IPO performance on the ASX

Britain’s Permira has emerged as the mystery suitor circling Accolade Wines, as the $1 billion business heads for a listing on the Australian Securities Exchange or a trade sale.

The appointment of investment banks to work on the deal is said to be imminent, with Credit Suisse, Citi, UBS, Macquarie all strong contenders.

Advisory firm Reunion Capital has been working for Accolade’s owner, Champ Private Equity, on options for the business, as recent market volatility threatens IPO prospects collectively worth at least $6 billion.

A British private equity firm was known to be circling Accolade, as flagged by DataRoom, and it is now understood that Permira was sounding out the business as recently as two months ago.

Permira is a European firm that invests in the consumer space, and the attraction of Accolade is likely to be that it generates about half of its revenue in the British market, where it is well known.

Champ managing director John Haddock has been in Asia sounding out potential buyer interest in the business after Chinese investor Co-Farm ran an eye over the Accolade operation for a possible acquisition.

Accolade, which has brands including Banrock Station, Hardys, Leasingham, Bay of Fires, Stanley Wines and Nobilo, is expected to sell for at least $1bn.

Many are betting Mr Haddock’s former employer, Credit Suisse, will land a role on the float, while Reunion Capital’s Mike Everett is said to be close to Citi’s equity capital markets head John McLean, a friendship cultivated while attending the same school in Perth, and his firm is a supporter of the bank’s private equity deal maker, Aidan Allen.

UBS and Macquarie have a strong track record in equity capital market activity and the ability to tap Chinese buyers and investors, while Goldman Sachs will not be in the running because of conflicts in advising rival Treasury Wine Estates.

Bankers have been eager to float Accolade in the hope that the business soars on the market following rival Treasury’s recent strong market performance.

But some believe that Champ may be keen to secure a Chinese buyer that will pay a knockout price following other recent lucrative deals, as choppy market conditions pose a growing risk to any floats.

Other deals heading to the market may face headwinds.

Some strongly performing Australian real estate stocks have fallen by about 15 per cent after rallying due to interest rate cuts.

This could create pressure for Charter Hall’s Long WALE REIT IPO plans, a deal that was expected to be popular.

Some believe the ability to float TPG Capital’s $3 billion energy company Alinta will largely depend on the success of its other business heading for an IPO, such as poultry producer Inghams Enterprises.

Alinta, which owns a retail energy business in Western Australia and various other power station assets, would be likely to need to generate a distribution yield of about 8 per cent to justify a float and secure investor support.

This would equate to about seven or eight times its annual earnings, according to some analysts.

The theory is that TPG will move to float Inghams first, and price the deal in a way that will ensure the company will rally in the aftermarket.

Should the business perform poorly, investors might be deterred from committing further funds to a deal from the same vendor.

Inghams is expected to float at a price that sees the business worth about $1.5 billion.

This would translate to a similar valuation to recently listed rival Tegel Foods, which has rallied since it hit the boards earlier this year at what was considered a conservative price.