Explosives firm in A$1b float

Australia's top listed investment bank, Macquarie Bank, yesterday lodged a prospectus to float explosives company Dyno Nobel, valuing it at as much as A$1.83 billion ($2.05 billion).
The flotation of a 57 per cent stake, the first major Australian initial public offering (IPO) of the year, is expected to raise between A$902 million and A$1.03 billion, priced in a range of A$1.89 to A$2.27 per share.

The IPO kicks off what is expected to be a bumper year in Australia for public and private sector IPOs and secondary share sales. Bankers expect total capital raisings of about A$40 billion in 2006, compared with about A$35 billion last year.

Dyno Nobel is the world's second-largest explosives company, after Australian-based market leader Orica.

"The dynamics of the industry are quite attractive at the moment with expanding commodity production, and they are also exposed to construction and quarrying which has been growing in North America," ABN Amro Asset Management portfolio manager George Clapham said.

The offer of 464.6 million shares is being managed by Macquarie and Credit Suisse's Australian arm.

Dyno Nobel was purchased last year for US$1.7 billion ($2.57 billion) by a Macquarie Bank-led consortium, which sold on part of the business for US$685 million to Orica.

The Macquarie-led consortium will retain the remaining stake in the slimmed down company.

"You now have two Australian companies who are market leaders in the field of explosives going head to head globally," Dyno Nobel chief executive Peter Richards said.

Dyno Nobel has made a proforma earnings per share forecast of 14Ac and at the upper end of the price, the stock is priced at 16.2 times earnings for fiscal 2006.

That matches Orica's price-to-earnings multiple of 16.2, although Orica, whose interests also include chemicals, fertilisers and paints, is valued at about A$7 billion.

Orica shares closed down 2.5 per cent at A$22.42 in a weaker market yesterday but have added about 10 per cent to date this calendar year.

The part-sale of Dyno Nobel gave Orica's mining services division the Dyno Nobel operations in Europe, the Middle East, Africa, Latin America and Asia.

The Macquarie-led consortium holds the Australian and North American operations.

- REUTERS