Summerset share price set -$1.40 each

Construction at one of Summerset's retirement villages in Auckland. Photo / supplied

Summerset Group, the retirement village operator preparing a partial float, has set its listing price at $1.40 a share, the bottom end of the indicative range.

The company said it plans to sell 88.3 million shares in an initial public offering on Monday, which will raise about $123.6 million, and it expects to list on November 1.

Australia's Quadrant Private Equity, which owns the retirement village operator, hoped to raise as much as $136 million, at $1.60 a share, by selling 30 per cent of Summerset.

The offer will be made up of a partial sell-down and a primary capital raising of $50 million to pay for further growth as Summerset looks to build 250 new units every year for the next five years.

"It is pleasing to see strong market endorsement of the compelling sector fundamentals and Summerset's leading position within it, notwithstanding global market conditions," chairman Rob Campbell said in a statement.

The final price was first reported in Australian Financial Review, which said Australian fund managers shunned the bookbuild, which was supported by local institutions. Quadrant will continue to hold about 56 per cent of Summerset after the float.

The private equity firm completed its full takeover of Summerset last year when the Overseas Investment Office signed off on the deal, buying the 50 per cent it didn't own from fund manager AMP Capital Investors New Zealand.

AMP Capital sold up after it failed to get the retirement village operator away in a public float in 2007. Quadrant came on board in 2008, investing A$90.5 million of a A$500 million private equity fund.

The retail offer will be available to New Zealand resident clients of NZX firms who have received an allocation from that firm, and a pool for Summerset residents and employees. An institutional offer will also be made, though there won't be a public pool for investors.

Craigs Investment Partners, Deutsche Bank and First NZ Capital are joint book-runners, joint lead managers and joint organising participants for the initial public offering.

Forsyth Barr was also appointed a joint lead manager.

The company is forecasting pro forma net operating cash flow of $51.9 million and total investment properties worth $632.6 million in the financial year ending Dec. 31, 2012. It expects underlying profit after tax of $6 million this financial year, rising to $9.7 million in 2012.

Summerset is New Zealand's third-biggest retirement village operator, and has the second-fastest pace of construction.

The company made a loss of $1.8 million in the 2010 calendar year after booking a $5.9 million tax charge from Budget 2010 depreciation rule changes, compared to a profit of $1 million a year earlier.

Operating profit rose 8.7 per cent to $7.5 million on a 39 per cent surge in revenue to $34.2 million, while finance costs almost halved to $3.4 million.

Quadrant successfully floated Kathmandu Holdings on the NZX and ASX in 2009, raising A$375 million for the first float on the New Zealand exchange in 22 months, and last year bought Asia Pacific media clipping agency Media Monitors Australia Pty.