Institutional investors are so far throwing their support behind the mining consumables business Molycop that plans to head to the ASX boards by Christmas.
Investment banks working on the deal hosted a lunch this week for fund managers interested in investing in the company, which has previously been on the market for about $2bn.
Its private equity owner American Industrial Partners is understood to have been in the market refinancing about $1bn of debt for the business, and the thinking is that should it list the IPO would also be about $1bn.
That’s a lot of money to raise in a tough market. In the group’s favour is that it generates a lot of cash flow, and while its revenue only grew at about 8 per cent its earnings were stable. The group generated $183m in earnings before interest, tax, depreciation and amortisation for the 2023 financial year. Earnings growth in the past has been at about 5 to 6 per cent per annum.
Also attractive to investors is that it counts gold and copper miners as its key customers, accounting for more than 75 per cent of earnings.
And while it has capital costs of $25m to $30m, that’s not so much of a concern given the EBITDA it is generating.
The thinking in the market is there’s plenty of upside as copper miners and others ramp up to accommodate the growing trend towards electric vehicles.
Normally in a strong market, Molycop would fly out the door, but the problem is that the current market conditions for listings are weak.
The meetings with local fund managers follows an international roadshow.
The private equity owner of Molycop hired Goldman Sachs, Morgan Stanley, Macquarie Capital and UBS to work on a float earlier this year, while Reunion Capital is also its adviser.
Molycop describes itself as the largest and most experienced supplier of mining consumables and associated services.
It makes steel balls used in mining, designing and manufacturing a range of SAG and Ball mill liner bolts for the mining and mineral processing industry globally.
Molycop holds about 80 per cent of the industry’s market share, with manufacturing sites globally.
It used to be part of the listed Arrium business before it collapsed and was considered the jewel in the crown.
American Industrial Partners purchased the business in 2016 for $1.6bn after Arrium was placed into administration that year.
Record Point and Morgan Stanley made efforts to sell the business in 2021 but instead recapitalised the company.
China energy bid switched off
Aspirations by China’s State Grid to buy Jemena are understood to have put an end to a possible sale of the energy business.
Healthscope firmly in the sights of Bain
Bain Capital is closing in on its next big target struggling with too much debt – the country’s second-largest hospital operator Healthscope.