VTNZ to float minority stake only in bid to free up capital

Only a minority stake in Vehicle Testing New Zealand (VTNZ) will be floated on the market, its owner says.

Motor Trade Association (MTA) chief executive Stephen Matthews said yesterday it wanted to reduce the amount of capital tied up in the business, believed to be worth between $50 million and $100 million.

VTNZ had no need for extra capital but the MTA still saw growth opportunities.

"The MTA still has a lot of capital tied up in this business, so [the planned float] is about giving members the opportunity to participate as well as the public," Matthews said.

MTA is believed to be under pressure from members, who feared the loss of their share of investment if they let their membership of the association lapse.

In April, the association's 4000 members agreed to the flotation. It has appointed investment bank First NZ Capital to advise on the transaction.

Association members are likely to get preferential rights to the shares in the float. Meanwhile, the float proceeds will be used to strengthen the MTA.

A capital return may also be on the cards.

"We are looking forward to publishing a prospectus later in the year with a view to a public float in November," Matthews said.

VTNZ has more than 60 stations nationwide offering warrant of fitness checks, pre-purchase inspections and vehicle registration.

MTA acquired the former state-owned enterprise for $19.2 million in 1999 and since then it has bought rival On Road New Zealand.

It is one of three companies so-far identified as new candidates for flotation on the New Zealand Exchange, which has seen a dearth of new issues and high-profile departures such as Carter Holt Harvey.

These departures combined with the successful float of Rakon, maker of the world's smallest receiver, has whetted investor appetite for the offers. Rakon was sold to investors at $1.60 and closed last night at $2.35.

The other leading candidate for a float is the mail order catalogue business EziBuy.

Chairman Kevin Gillespie said yesterday the company would be evaluating whether to float in September.

Its backers, including former brewing magnate Douglas Myers, the ACC as well as the founding Gillespie family and investment firm Direct Capital are also keen for a float.

The company has sales of about $150 million and employs 700 to 800 people.

Hire equipment business Hirepool may also be in the running for a float.