Metroglass float in the hands of institutions to set price

Thursday 3rd July 2014

A draft prospectus for the float of Metro Performance Glass has been in the hands of fund managers since Monday and they will set the price of the float tomorrow when a bookbuild is completed.

Retail investors will get information next week, likely on Monday, when the prospectus is registered with the Companies Office. The prospectus when registered will have a price rather than a range to be set in a bookbuild later.

Ahead of that there’s been considerable unsourced speculation about whether or not the float will go at the top end of a $1.65 to $1.90 a share range institutions are considering in a bookbuild. Australian media reports are speculating the price will go at the top end of the range, while New Zealand Institutions are talking it down.

New Zealand Shareholders’ Association chairman John Hawkins does not have a problem with the process, saying an upfront bookbuild has the advantage of setting a price early.

“We favour a front-end bookbuild as opposed to a back-end one, which the government did with MightyRiverPower,” Hawkins said. “At least that means when the thing is available for investors to invest in there is a known price.”

The bookbuild comes after the Hirepool float fell over because the promoters’ suggestion of price was at odds with institutions.

The Australian Financial Review reported there is strong demand and the price will be toward $1.75 to $1.80. This was confirmed to BusinessDesk by a person familiar with the float.

Hawkins told BusinessDesk the speculation was not ideal, in that “there is always a problem that institutions get a bit of a heads up ahead of ordinary investors prior to a bookbuild.”

Still, questions about price simply indicated tension in the price-setting process.

The Metroglass vendor is Australian private equity company Crescent Capital, which has owned the Auckland-based business for six years, but it is not yet known if they are partially or fully selling down. Anchorage Capital and other major shareholders are also selling down in the float.

The sale is expected to be worth between $237 million and $273 million, depending on the price set in the bookbuild. That’s a price to earnings ratio of between 12.5 to 14.5 times earnings.

The joint lead managers of the offer are Forsyth Barr, Macquarie Securities NZ, UBS New Zealand and Macquarie. In June, they said Metro Performance Glass was considering an initial public offer, which was expected in July. The sale will be via broker allocation.

BusinessDesk.co.nz

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