Onsite Rental Group appears to be taking a cautious approach for its initial public offering plans, raising less than was expected ahead of its listing on November 18.
On Tuesday, price terms of the deal were released, which revealed that the company would be worth between $400m and $430m and it would raise between $238.9m and $252.8m. The share price range will be between $2.87 and $3.15 and the pricing equates to between 4.9 and 5.2 times earnings before interest, tax, depreciation and amortisation.
Some fund mangers spoken to about the terms have described the deal as “average”, so it will be interesting to see if it gets across the line when the bookbuild unfolds next week. It comes after suggestions in the market that Onsite had been trying to lock in a cornerstone investor ahead of its float, but it is understood that the deal has not been cornerstoned.
The company, which offers equipment to the mining and infrastructure sectors, is being listed through Macquarie Capital and Bank of America.
Prospective investors have learned the business offers rental equipment to companies, offering a fleet of 70,000 assets through 33 branches across Australia, primarily for access, power and site accommodation.
The news comes after earlier expectations the group would be priced at between 4 and 5 times its EBITDA and sell down three-quarters of the company.
Onsite Rental’s net debt will be $89.9m and its enterprise value between $490m and $520m.
The dividend yield for the 2020 financial year will be between 4.4 and 4.7 per cent. Onsite Rental will lodge its prospectus for the offer on October 30.
The company has been owned by Next Capital and is now controlled by US debt investors, which had recapitalised the operation. Its market share sits at 7 per cent and the business services the resources, infrastructure, commercial and industrial property industries.
About 46 per cent of its revenue is generated from the resources industry, of which more than 70 per cent is from long-term production and maintenance contracts with major mining companies, and about 22 per cent is from infrastructure, predominantly on the east coast.
Onsite Rental has made an attempt to list in the past, but the deal was pulled at the time by its private equity owners.
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