HWL Ebsworth has ditched IPO, say sources

HWL Ebsworth has decided not to proceed with its sharemarket float, sources say.

Law firm HWL Ebsworth has abandoned plans for its initial public offering, according to sources.

It is understood the company was in search of an additional $25m before opting to walk away from the deal on Thursday night.

The group, which was to be renamed Alarcon when listed, had already recut its terms to make itself more appealing to prospective investors.

The investors were understood to have been deterred from participating in the prospective float due to the fact that it plans to list with a $232.5m debt pile.

Sources said the investors sidestepped the deal due to concerns the debt would be used to pay partners a major pre-IPO dividend. They also expressed caution about the lack of clarity around the old and new models of partner remuneration, and they lacked conviction about the strength of the firm’s management.

The company told fund manager investors on Tuesday that it had scaled back the size of its initial public offering to $151m from earlier ambitions of raising between $232m and $255m.

It had an IPO price of $2.30 per share.

HWL Ebsworth is a full-service Australian corporate law firm that is a significant player in the local market, providing legal services to corporate and government clients.

The law firm hoped to move to a public company structure from a partnership model and started its management roadshow last week.

Its raising was to consist of a $20m primary selldown and a $131.4m secondary selldown by existing investors.

The company’s market value was to be $407.4m, with new shareholders to own 37.1 per cent of the business, compared to the 49.5 per cent originally planned.

Earlier, the law firm was expected to have a market value of between $471m and $519m.

Working on the float were Macquarie Capital and Bell ­Potter.