Fund managers are describing the $266.5m-plus valuation of the online trade services platform hipages as reasonable as it set the price range for its initial public offering, at $2.05 to $2.45 a share.
The range implies a value of between 4.3 times and 5.3 times its revenue.
The size of the company’s IPO will be between $89.1m and $100.4m, with $40m in primary proceeds and $49.1m to $60.1m in secondary proceeds.
hipages market value will be between $266.5m and $318.5m.
News Corp, publisher of The Australian, which owns 30.1 per cent of the online platform, will own 25.4 per cent once it is listed, while chief executive and co-founder Robert Sharon-Zipser will reduce his stake from 10.3 per cent to 6.5 per cent.
hipages is listing through Goldman Sachs and its management roadshow started Monday.
The bookbuild will be held on October 22 and the prospectus will be lodged on October 23, with shares to trade on a normal basis on November 16.
The attraction by fund managers to the business is that 90 per cent of its revenue is recurring.
The IPO funds will be used for expansion amid rising demand for home improvements and related services.
Started in 2004, the company has 36,000 paying trade services in Australia on its platform and will focus on gaining additional scale in the domestic market, which has about 257,000 trade businesses, for about two years before expanding offshore.
It is understood hipages booked revenue of about $50m, growing at about 20 per cent per annum, and underlying earnings of close to $4m in the 2020 financial year.
Comparables for the company are other online classified advertisers such as Carsales, REA Group and Seek.
It recently secured a three-year contract with the NSW Education Department with an option to extend for two years.
Earlier, analysts at Goldman Sachs valued the business at between $280m to $370m.
It comes as the pricing of IPO prospect Adore Beauty this month showed that companies with an online presence are going for top dollar, with the online cosmetics retailer achieving a valuation of 3.9 times its revenue, equating to a $635.3m market value.
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