Fund managers may be concentrating on full-year results right now in the reporting season, but they are still giving some thought to the initial public offerings that are trickling through the market, hoping to list by Christmas.
The pipeline for floats is far smaller than earlier expected due to the coronavirus pandemic, but some groups are still braving the difficult conditions and good buying opportunities still exist.
Many fund managers are eagerly awaiting details about the Quadrant Private Equity-backed online beauty products business Adore Beauty, which was founded by Kate Morris and is heading to the market through UBS and Morgan Stanley.
The big test will be whether the buyout fund, which is known to command top dollar for its investments, achieves its price aspirations of $600m for the business.
Some suggest the business is more likely to be worth about $400m.
Quadrant’s pitch to investors will be that demand will remain strong for Adore Beauty’s skin-care products and make-up, with well-known brands such as Calvin Klein, Clinique, L’Oreal, Revlon and Lancome.
This comes at a time that many are gun-shy about venturing into shopping malls given the volatile situation surrounding COVID-19.
Another deal set to launch is subtitles and captions firm Ai-Media, which is raising $66.8m through Bell Potter and Morgans and is slated to float on September 15.
Shares for the float of the company, founded by Alex Jones and chief executive Tony Abrahams, have been priced at $1.23 each. Its market value will be $177.3m.
The feedback on Ai-Media around the market is that the company is likely to perform well due to strong demand from retail investors and because it currently operates in a technology sweet sport, being immune to the COVID-19-related challenges.
However, some institutional investors plan to sidestep the selldown, arguing that there is too much stock being offloaded by the owners for their liking.
Maas, which hopes to list with a market value of about $500m, is being eagerly awaited by fund managers who are drawn to its leading position in infrastructure work in regional Australia and the fact its founder will retain a position.
That float is being handled by Morgans and Moelis.
Maas is a construction materials, equipment and services provider and is being floated by its founder, Wes Maas.
While Maas is regarded as a good business, its challenge is that other listed services companies such as Downer and CIMIC are trading on low valuations, so the big question will be whether investors will pay up.
The Dubbo-based company is expected to deliver at least $60m of earnings before interest, tax, depreciation and amortisation for the 2020 financial year, up 13 per cent from the previous corresponding period.
Another group progressing plans for its IPO is online retailer MyDeal, through Morgans Financial and RBC Capital Markets. It is hoping to capitalise on the current demand for internet shopping and raise about $85m from investors.
The company, which sells goods ranging from furniture to fashion, was founded by Sean Senvirtne.
MyDeal is backed by the wealthy Gandel family.
It has been compared to other successful online marketplaces such as Kogan or Temple and Webster.
The market is also being sounded out for a float of the Queensland-based Dalrymple Bay Coal Export Terminal by Brookfield.
However, many believe that a deal would be a tough sell, given the unpopularity of companies exposed to coal by lenders, institutional investors and superannuation funds.
DataRoom can reveal that last year, the $2bn-plus asset received some high-value bids from Chinese buyers.
However, they probably would not be approved by the Foreign Investment Review Board in the current environment.
Meanwhile, although floats are being worked on by equity capital markets bankers, equity raisings remain at the forefront of financiers’ minds.
Big deals are still expected to come to market for many of their clients, as the COVID-19 problems in Australia play out for longer than expected.
The understanding is that a number of groups that were anticipated to raise funds around May and did not come to the market will emerge with deals after reporting season.
Among the companies being closely watched for equity raisings are Scentre, Tabcorp, Air New Zealand and The Star Entertainment Group.
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