Australian chemicals business Ixom is believed to be working on a refinancing of the operation after shelving earlier efforts to sell the company to infrastructure investor Stonepeak.
Its owner, Keppel Infrastructure, told investors this month as it moved to raise equity that Ixom has a loan outstanding worth $136m ($S121m).
The company was once part of Orica and the understanding is that because of the value of the dividends that Keppel was paying to its shareholders from the business, it needed to achieve a sale price of over $1.8bn, otherwise the transaction would have been value destructive for its unitholders.
Most recently, Ixom was understood to have revived talks about a sale with Stonepeak, after it earlier competed to buy the business as part of a sale process run last year.
In its quarterly update delivered in March, Keppel Infrastructure said that Ixom continued to deliver a strong performance, and it would revisit a strategic review of the business when the market improved.
Despite strong interest from a mix of financial and strategic investors, macro uncertainties made investors more cautious, Keppel said.
Pricing was affected by rising costs of funding, and the tightening of debt capital markets did not reflect the quality of Ixom’s business and strong cash generation profile.
In the sale process last year, sources suggested that offers came in between $1.5bn and $2bn, but Keppel’s earlier price expectations were about $2bn amid booming market conditions.
For the first quarter of the year, Ixom generated $21m in distributable income, up 8.4 per cent from the previous corresponding quarter.
Ixom is a manufacturer and distributor of water treatment chemicals, industrial and speciality chemicals in Australia and New Zealand.
It has more than 30,000 customers comprising municipals and blue-chip companies.
Close to the company is investment bank JPMorgan.
Keppel paid $1.1bn for Ixom in 2018 after Blackstone purchased it from Orica in 2014 for $750m.
The company was expected to generate $180m in earnings before interest, tax, depreciation and amortisation for the 2022 financial year.
Its refinancing plans are unfolding as its Australian rival, chemicals distributor Redox, forges ahead with initial public offering plan.
A drive is now on to attract retail investors, with the business hiring retail brokers Wilson’s and Shaw and Partners as co-lead managers.
Some institutional investor sources say that support exists to buy the company at 12 to 13 times its net profit for fiscal 2024, but the Coneliano family owners are keen for a price of 14 or above, taking the group’s value to at least $1.4bn.
A float of 30 per cent of the company is planned through joint lead managers UBS and Ord Minnett, but the deal is being attempted in a volatile market where stock prices have been beaten down.
UBS analyst meetings finished on Wednesday with the offering extended to additional institutional investors in Australia, not originally shown the business.
Global companies including Univar, Brenntag, Azelis, DKSH and IMCD are considered to be its most comparable peers.
Redox is forecast to generate $1.24bn of revenue and $81.3m of net profit in the 2023 financial year and $1.33bn of revenue and $97.4m of net profit the following year.
Goldman Sachs well placed with Real Pet Food sale imminent
Investment bankers have recently entered a beauty parade in the hope of landing the job of selling the pet food company.
KKR weighing up $8bn office landlord Dexus
Blackstone made another bid for the real estate and infrastructure group last year, and now its major private equity rival is said to have been looking.