Will Boral be next to tap the market?

It is understood that Macquarie has been sounding out potential parties that may be interested in buying Boral’s US-based business.

Plenty of eyes will be on Boral next week when it is due to report its results, with some suspecting it could be one of the next major companies to tap the market.

The country’s largest building materials provider has a $4.61bn market value and $2.322bn of net debt as at December.

Its name is the one that is coming up most in conversations when it comes to equity raisings.

Should it choose to tap the market, its adviser Macquarie Capital, will no doubt be close by.

However, much of when and if it raises equity is thought to rest on the stance taken by recently appointed chief executive Zlatko Todorcevski, who has been continuing the work on a strategic review of the company that was already underway through Macquarie and Flagstaff Partners before he joined Boral from the board of rival Adelaide Brighton at the start of last month.

Any move to launch a raise would no doubt need to be accompanied by a detailed explanation of the company’s game plan to get investors on board.

Boral has continued to disappoint investors with its performance of late and many have been unhappy about the outcome of its $3.5bn Headwaters acquisition in the United States in 2016.

It is understood that Macquarie has been sounding out potential parties that may be interested in buying Boral’s US-based business, with some investors such as the interests of John Wylie lobbying for a sale or demerger of the that part of its offshore operations.

Analysts take the view that Boral could be in need of additional funds to strengthen its balance sheet, and some believe that it could require $500m as a starting point.

Adding to the argument that it may need to tap the market is the weak state of the construction market amid the COVID-19 pandemic, particularly on Australia’s east coast.

Boral is due to report its results on August 28 and the company recently refinanced debt.