Tax issue puts Chemist Warehouse IPO on hold

A move to avoid capital gains tax is said to be behind Chemist Warehouse’s move to wait until the fourth quarter of next year to embark on its initial public offering.

The company has undergone a restructure in preparation to become a listed group, and it is understood that to prevent the trigger of a major capital gains tax payment, the company has to hold the business for more than 12 months.

It is the country’s largest pharmaceutical retailer and after holding a beauty parade to appoint an adviser more than a year ago, Rothschild was hired.

In many respects, Chemist Warehouse is the float that most investors are waiting for, in that it will be the largest deal to come to the market for some time following what has been a relatively quiet year for IPOs. Some estimate the business to be worth about $5bn.

The Melbourne-based pharmacy chain — which is owned by My Chemist Retail Group and was founded by the Gance and Verrocchi families — has the largest share of the Australian pharmacy market, and last year was trying to ramp up advertising and roll out more stores. It generates about $4bn in sales annually and, in 2017, Macquarie Capital was holding investor education sessions about the business.