Lynch Flowers IPO blooming

Fund managers are expected to be briefed on the prospective float of Lynch Flowers through JPMorgan and Jarden in the coming weeks.

Fund managers are expected to be briefed on the prospective float of Lynch Flowers through JPMorgan and Jarden in the coming weeks.

Market sources say that the business will likely head to the boards for a listing before March in the new year after an on-again off again sales process this year that was disrupted by Covid-19.

However, while the joint-lead managers for Lynch are proposing the meetings before Christmas, they are yet to be locked in ahead of a listing early 2021.

Lynch counts Coles and Woolworths as its major customers, and while they may place pressure on their margins, they provide earning stability and are seen as co-dependent.

However, the business also has a strong domestic division in China, where it sells to wholesalers and retailers.

Most believe that Lynch, which is the country’s largest wholesaler of floral and potted products, will likely find support for a listing.

A sale was understood to have started earlier this year, but was suspended due to the onset of the COVID-19 pandemic.

Lynch is keen to capitalise further on supplying the booming e-commerce trade, which is particularly the case for its Chinese division.

The company is believed to be generating at least $40m of annual earnings before interest, tax, depreciation and amortisation, and the earnings are believed to be growing strongly.

The marketing is putting a multiple of 10 to 12 times EBITDA on similar businesses.

Stanton Road Partners and Citic-CLSA are also advising on the IPO.

Lynch specialises in exporting Australian wildflowers throughout the world and describes itself as a global leader in floral innovation, research and development.

It generates revenue from the wholesale of plants and flowers and was purchased by private equity firm Next Capital in 2015.

Founded by Leo Lynch last century, the company has offices in Sydney, Melbourne, Brisbane, Perth and Adelaide. The business began as a flower grower and moved into flower distribution in 1984.

The private equity owner is exploring a listing of Lynch after it earlier tried to list about a year ago its business Funlab, which owns Strike Bowling bars, Sky Zone indoor trampoline parks and Holy Moley minigolf.

However, such businesses are among those that have been hard hit by the Covid-19 pandemic.

Meanwhile, the $1.8bn non-bank lender Liberty Financial is expected to lock in enough support for its IPO, with its book build to be held on Wednesday.

Liberty is looking to raise between $321m and $364m at $6 per share, equating to 11 times its net profit, before listing on December 17.