Evolve IPO runs hot - share requests scaled back

A Lollipops Educare in Napier. Evolve Education group is planning to raise around $135m to buy the company. Photo / Duncan Brown

Demand for a sharemarket listing of New Zealand childcare businesses has been running hot, with institutional investors receiving much smaller allocations of the stock than they would have liked, according to market sources.

Evolve Education Group, a planned roll-up of Kiwi childcare businesses, is preparing to list on the NZX and Australia's ASX before Christmas.

It's understood to be aiming to raise around $135 million through its initial public offer [IPO], which will fund the acquisition of early childhood education companies including Lollipops Educare and Porse.

A bookbuild with institutional investors took place yesterday and one fund manager, who did not want to be named, said his firm received less than half the shares it had requested.

Another source also said demand for the offer had been very strong.

A prospectus for the Evolve IPO is expected to be registered today.

The investment source said formerly NZX-listed childcare operator Kidicorp was never a great sharemarket success - it de-listed in October 2007, nearly six years after its original listing - but businesses from the sector had been doing very well in Australia in recent times.

"There was likely to be reasonably strong interest [in Evolve] from Australia," the source said. "We got well less than half the shares we were after."

Forsyth Barr and Goldman Sachs are managing the offer, which does not have a general public pool.

Investor demand for the IPO of software developer Orion Health, which will list on November 26, was also extremely strong.