MPC Kinetic shelves IPO on weak investor demand

View of a wind farm near Diadema Argentina, in the Patagonian province of Chubut, Argentina, on September 12, 2019. - In Argentine Patagonia, land of giant fossils and oil, the wind tears. Its strength and perseverance, unique in the world, are a magnet for wind energy investments. (Photo by RONALDO SCHEMIDT / AFP)

MPC Kinetic’s initial public offering plans were shelved Thursday night after it was earlier repriced lower to $2.25 per share.

The move by the company came on the back of weak investor demand and after it also scaled back its offer size to $150 million to $230m.

Initially, the deal was priced at $2.50 per share.

The bookbuild was launched Thursday ahead of a listing on October 29.

After lowering the price, investors were to buy shares at 5.9 times the company’s estimated earnings before interest, tax, depreciation and amortisation for the 2020 financial year on an enterprise value basis.

It was earlier priced at 6.6 times.

The shelving of the deal comes after fund managers had earlier said that while MPC Kinetic was seen as a good business, they believed it carried a high price and questioned whether a big enough amount of stock would be sold to retail investors.

It will be interesting if other companies planning to head to the boards are forced to follow suit, with some suggesting a number of companies launching an IPO are not offering large enough discounts, in particular PropertyGuru.

MPC Kinetic has a leading share of major pipeline construction in Australia and is a new entrant to wind farm construction.

Its primary focus is on the upstream operations in the CSG industry in Queensland, from which it historically has secured two-thirds of its gross profit and it expects the development of new wells to meet gas demand to propel its earnings higher.

The company was formed in June last year following the merger of MPC Group and Kinetic and offers service to customers across the majority of CSG activities.

Joint lead managers were Credit Suisse and UBS.

The repricing took its market value to less than $408.9m.

The company was offering a dividend yield of between 2.3 per cent and 3.5 per cent.

Owners SCF Partners and Viburnum were to each sell down 20 per cent of their pre-IPO shareholding.