Metroglass shares first trade at $1.75, for 2.9% gain from IPO

Wednesday 30th July 2014

Shares of Metro Performance Glass rose 2.9 percent on their NZX debut, after a $244.2 million initial public offer which saw private equity owners Crescent Capital and Anchorage Capital reduce their ownership to an 18.5 percent stake in New Zealand's largest glass processor.

The shares first traded at $1.75, up from its $1.70 IPO price and giving the company a market capitalisation of $323.8 million. Some $230.5 million of the funds raised went to existing owners Crescent Capital and Anchorage Capital and senior management. Of the balance, $10.9 million will cover the cost of the offer and $2.8 million will go towards reducing debt, with net debt about $50 million upon listing.

The company expects to lift net profit to $14.3 million in the 12 months ending March 31, 2015, from $12 million in 2014, with annual sales forecast to rise to $171.9 million from $155.4 million. It expects to pay a dividend of 3.6 cents per share in the 2015 year, implying a cash yield of 2.1 percent.

"The New Zealand value added glass processing market is forecast to grow, driven in particular by the expansion of the residential construction market and the improving commercial construction market," chairman John Goulter said in the prospectus. "Whilst the New Zealand construction market is cyclical by nature, residential construction activity is forecast to exceed historical averages over the medium term, buoyed by economic growth, net migration flows, the stimulus of the Christchurch rebuild and the reversal of the below average level of building activity over the past six years since the global financial crisis."

The price was set at the lower end of the indicative price range of $1.65 to $1.90, in a front-end book build where institutions set the offer price before retail investors saw the prospectus.

The current owners spent about $40 million over the past three years, including upgrading the company's facilities, and anticipate capital expenditure of about $5 million over the next three to five years, chief executive Neil Rigby said earlier this month. The private equity firms took control of Metroglass in 2012 after its previous owner couldn't manage the debt burden of the company, which took an impairment against goodwill.

After the write-down, the company had an enterprise value of $180 million, less than half the $366.2 million paid by original private equity owner Catalyst Investment Managers in 2006, according to documents released by the Overseas Investment Office at the time.

Metroglass is the seventh company to list on the NZX this year, as the local stock market enjoys a flurry of listings. Last week, ikeGPS Group, which sells a range of portable measuring devices, and Scales Corp, the fruit packager and exporter, debuted on the NZX. Both have fallen below their IPO prices.

Last month, Gentrack Group, the utilities and airport software provider, and Serko, the travel booking system company, debuted. While upcoming listings include Vista Group International, a cinema ticketing and data analytics firm and ERoad, a logistics and fleet management company, in August.

The company is dual-listed, with its secondary listing on the ASX.

Forsyth Barr, Macquarie Capital and UBS New Zealand were joint managers and underwriters of the Metroglass offer.

BusinessDesk.co.nz

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