Spotless aims for clean billion

SPOTLESS is expected to raise $1 billion in its initial public offering, the maximum amount that can be raised in the IPO, with indications that demand for the shares is firm at the bottom of the IPO’s price range, or at $1.60 a share.

The outsourced facilities management company will today begin the book build of Australia’s biggest IPO of 2014. The book build ends tomorrow and Spotless shares are expected to begin trading on the ASX on Friday, according to the company’s prospectus.

A total of 677.6 million new and existing shares will be sold, including an option to allocate an extra 81.1 million shares.,

The IPO’s price range of $1.60 a share to $1.85 a share is 12.4 times to 13.6 times the company’s forecast 2015 net profit per share.

Spotless, its financial adviser Highbury Partnership, its owner Pacific Equity Partners and the IPO’s joint lead managers Citigroup, Deutsche Bank and UBS, have already allocated $200m of the IPO to retail investors. Evans & Partners is the co-lead manager of the IPO. Upon completion new shareholders will have about a 50 per cent stake in Spotless, with Pacific Equity Partners and management having the remaining equity in the company.

Sydney-based Pacific Equity Partners acquired Spotless in August 2012 for an enterprise value at acquisition of $1.1bn. Its stake after the IPO is forecast to be about 35 per cent. Spotless’s market value is expected to be between $1.76bn and $1.93bn after the IPO.

The proceeds of the IPO will be used to repay some of Spotless’s $1.28bn of liabilities. In the 12 months to June 30, 2012, the company’s revenue rose 2 per cent from the same period in 2011, to $2.41bn. Earnings before interest, tax, depreciation and amortisation fell 4.5 per cent to $139.6m.