MAAS and Pepper Australia delays, Velocity pullout add to IPO market woes

Wes Maas started Mass Group with one Bobcat and a tipper truck in 2003.

Australian construction materials, equipment and services provider Maas Group Holdings has become the latest initial public offering candidate to delay its listing plans until next year, prompting some to wonder whether equity capital markets bankers will be in for a slim payout come bonus time.

Maas has followed Kohlberg Kravis Roberts with its Pepper Australia finance assets in pushing back its IPO until 2020.

The situation is unfolding at a time when fund managers are becoming increasingly frustrated at the lack of real opportunities being presented before Christmas. Many had attended the investor education meeting for Maas. They had also been eagerly anticipating a float of the highly attractive frequent-flyer program for Virgin Australia, Velocity, only to conclude the supposed IPO of the operation by private equity owner Affinity Equity Partners was a stalking horse for the airline.

Virgin has agreed to outlay $700m for a 35 per cent interest in the business — a rich price, according to market analysts, that was likely only achieved due to the popularity of the business among institutional investors.

IPOs are sharply down on previous years, which will make bonus time in February for investment banks based on the 2019 calendar year performance interesting. Some even expect job losses among ECM teams as a sluggish global economy continues to weigh on finance powerhouses internationally.

The big saviour could be the float of the $5bn Latitude Financial, should that come off this year, with UBS, Goldman Sachs and Macquarie Capital on the ticket.

The $600m-odd Maas Group, meanwhile, has been working with advisory firms Moelis and Morgans on its IPO, which was originally expected to happen before Christmas. Maas was looking to tap the public market for equity to fund acquisitions. However, it is now understood the group has the funds to pay for the deals without a listing.

It will try to hit the boards next year, when the operations it acquires will boost its bottom line and enable the company to command a stronger price.

Dubbo-based Maas was founded in 2003 by Wes Maas, a former South Sydney rugby league player who played NRL in 2002 and, according to the company’s website, started with one Bobcat and one tipper truck at the age of 23. It now has 500 staff operating across construction materials, civil and plant equipment hire, underground equipment services and commercial and residential real estate, with operations in Australia as well as Vietnam.

The business, which is focused on the civil, infrastructure and mining markets, is expected to be popular with investors, partly due to Mr Maas’s involvement. It is on track to generate annual earnings before interest, tax, depreciation and amortisation of between $55m and $65m, after making about $50m of EBITDA during the 2018 fiscal year.