Hirepool aims to raise up to $262m from IPO

Business Reporter·APNZ·

16 Jun, 2014 05:00 PM3 mins to read

Chief executive Brian Stephen.

Another substantial stock is set to list on the NZX after rental company Hirepool yesterday registered its prospectus for an initial public offer aimed at raising up to $262 million to allow a capital raising and partial sale of shares by its existing owners.

Post-float, Hirepool will have an indicative market capitalisation of between $281 million and $339 million, according to the offer documents.

At the top end of that range, Hirepool as a listed entity would be of similar size to NZOG, which yesterday had a market capitalisation of $326 million.

Hirepool, which last year merged with its main rival, Hirequip, is looking to raise between $175 million and $262 million - based on an indicative price of $1.10 and $1.50 a share - making it the year's second biggest float after the state-owned Genesis Energy's partial sell-down in April, which raised $733 million.

Hirepool said the offer would comprise up to 120.1 million new ordinary shares to raise about $135 million of new capital and would involve the sale of up to 83.5 million existing shares.

Capital raised through the issue of new shares will be used to pay down Hirepool's existing debt and to buy more shares in a majority-owned subsidiary. Chief executive Brian Stephen said the company would also look at acquisitions over the next 12 to 18 months.

After the offer, existing shareholder - Australian private equity firm Next Capital - and its co-investors would continue to own between 20 to 35 per cent of the company's ordinary shares, the company said.

As it stands, Next has 64 per cent, Macquarie Group 21 per cent, Hunter-Powell Investment 7 per cent and past and present management the remainder.

The final pricing of the shares will be determined on June 24 through an auction-style bookbuild process aimed at institutions and retail brokers. There will be no public pool.

The newly merged Hirepool and Hirequip are the biggest equipment rental operators in the country, but there are many large and small competitors in what remains a fragmented market, Stephen said.

Hirepool's main competitors are Porter Hire and Kennards, he said.

On a pro-forma basis, Hirepool's earnings before interest, tax, depreciation and amortisation for the current financial year to June 30 are projected to be $46 million rising to $60 million in 2014/15, according to the offer documents.