Tasmea weighing up $400m-plus ASX listing

Tasmea managing director Stephen Young at the site of lifting and rigging services subsidiary Nobles. Picture: Mark Brake

Adelaide businessman Stephen Young is weighing up another tilt at a float of his engineering services group, sounding out institutional investors ahead of a potential $400m-plus listing as early as next month.

Tasmea, previously known as E&A Limited, provides engineering and maintenance services to the mining, oil & gas, water, defence, infrastructure and energy sectors, with BHP, Santos and Rio Tinto among its top tier customers.

The potential listing on the Australian Securities Exchange follows a flurry of acquisitions by the Perth-based company, which according to its latest financial report, completed five deals in the 12 months to June.

It now controls 16 subsidiary businesses operating across Western Australia, South Australia and Queensland, employing more than 1400 workers.

A proposed ASX return of the company - which changed its name in March - was earmarked in its latest financial report, and was confirmed by Mr Young - the company’s co-founder and managing director - on Wednesday.

“We are currently in the early stages of evaluating our options, and with that in mind we’ve had a round of presentations in what’s called a non-deal roadshow,” he said.

“We’re going through the institutional end of evaluating our options, and so it’s a one-on-one presentation format.”

A non-deal roadshow is typically used by companies to gather feedback from institutional investors ahead of preparation and lodgement of a formal prospectus.

Mr Young, who controls a 47 per cent stake in the company, said it was too early to comment on the level of interest generated so far from institutional investors, but confirmed a float was possible as early as next month, and could value the company at more than $400m.

According to the company’s latest financial report, Tasmea turned over close to $320m in the year to June, up 31 per cent from the previous year.

Earnings before interest and tax came in at $30.3 million, up 38 per cent, while net profit after tax of $19.5m was 42.8 per cent higher than the previous year’s result.

“The group’s improved trading results reflect the ongoing strategic focus on recurring revenue generated from providing maintenance, shutdown and skilled labour services to ‘essential industry’ asset owners,” Mr Young wrote in the report.

“The market conditions for the resources, energy and infrastructure sectors are expected to provide Tasmea subsidiaries with consistent demand for their specialised trade skills services.

“Tasmea continues to assess a number of acquisition opportunities.”

Tasmea is chaired by Perth-based GR Engineering co-founder Giuseppe Totaro. He recently replaced Adelaide businessman Michael Terlet who remains a director of the company.

Co-founder Mark Vartuli also sits on the board with a 21 per cent stake.

E&A previously spent a decade on the ASX following a public listing back in 2007.

However the end of the mining boom led to back-to-back losses in 2014-15 and 2015-16, and the company de-listed in 2017 following a collapse in the company’s share price.

A year later two subsidiary businesses - Ottoway Engineering and Ottoway Fabrication - fell into administration with debts of $45m.

However with the company moving away from mining construction in recent years, and shifting its focus to more stable engineering operations and maintenance work, the latest bid at an ASX return is being pitched as a very different offering to investors.

Among the company’s recent acquisitions was last year’s bail out of one of South Australia’s oldest companies - lifting and rigging services provider Nobles.

At the time Mr Young said E&A had been pushed to the brink following the decline of the mining boom, but with the help of its lenders it had survived, and the company had since taken a new direction.

“We learned valuable lessons and concluded that we did not have sufficient balance sheet strength to undertake large ‘hard money’ construction work, and we shifted our entire business focus away from construction to the provision of maintenance services,” he said at the time.

Tasmea’s potential listing would be the second-biggest float in an otherwise quiet year of initial public offerings. Chemical distributor Redox listed in July with a $1.3bn valuation.

Tasmea has hired stockbrokers Bell Potter and Shaw and Partners.