DNZ Property Fund joins IPO rush

New DNZ Property director Simon Botherway.

DNZ Property Fund, which has a portfolio worth some $770 million, has joined the IPO rush and is looking to raise as much as $140 million in a bid to pay down bank debt, end its management contract and join the NZX-50 index.

The property fund manager wants to raise $130 million through an initial public offering which is fully underwritten by Goldman Sachs JBWere.

Some $30 million will be reserved for existing shareholders and a further $100 million offered to institutions and NZX primary market participants.

It will accept up to an extra $10 million in oversubscriptions.

"We believe it is important to reduce our gearing to levels more appropriate in the current market, and to levels that would ensure support from institutional and other new investors," chairman Tim Storey said in a statement.

"Market interest has been increased by our decision to terminate the management contract currently held by DNZ Management Ltd. and internalise the management function."

DNZ Property joins a number of other companies, such as outdoor supplies retailer Kathmandu Holdings and dairy company Synlait Ltd going public after 22 months of IPO inactivity on the stock exchange.

AMP Capital Investors' head of equities Guy Elliffe put the rush down to surging investor confidence and reasonable share prices, along with "credible" offers.

Storey said he expects the company "to be eligible for inclusion in the NZX's Top 50 companies" as a result of the restructure.

The offer price is 82 cents a share following a two for five share consolidation undertaken earlier this week.

The board renewed its contract with the manager last year, and Paul Duffy will be retained as chief executive of the company.

Duffy will keep an ongoing investment in DNZ Property, and the shareholders in the DNZ Management will reinvest about 50 per cent of the proceeds from the termination payout into shares that will be held in an embargo for up to 18 months.

DNZ Property grew out of the relationship between Dominion Funds and Money Managers.

It's been looking at options to raise money and restructure the company, which includes bringing on Simon Botherway, who founded Brooke Asset Management, as a director.

The company expects net rental income of $60 million in the 2011 financial year. Its net rental income was $44.1 million in the 12 months ended March 31.

- BUSINESSWIRE