Will investors fire up over new listings coming to the market or will they fizzle? Photo / File
It's stacking up to be a potentially very busy end of the year for initial public offers with two in the telco sector plus steel titan Vulcan.
It is understood Vulcan is currently talking to fund managers and institutions on both sides of the Tasman ahead of a potential dual listing, currently slated for some time in November.
The privately-owned Australasian steel products distributor has conducted a "non-deal" roadshow in July and Aussie media reports have put the company's possible worth at A$1 billion (NZ$1.04b).
Vulcan, which has a New Zealand base in Auckland, is understood to be bringing in more
than NZ$700 million a year revenue and NZ$100m in ebitda.
The company has been going for 25 years in what historically has been a fragmented market.
It is chaired by Russell Chenu, who has held finance and management roles in several ASX-listed industrial and resources companies, including James Hardie, where he was chief financial officer for 10 years until 2013.
Meanwhile 2Degrees, which has been slated for an IPO by the end of this year, has announced its full board lineup should the listing proceed.
Former Port of Tauranga CEO Mark Cairns, who was named as chairman elect in July, will be joined by Kathryn Mitchell, Kenneth Tunnicliffe, Meg Matthews, John Stanton, Brad Horwitz and Erik Mickels.
Horowitz is the current chair of the 2degrees board and a co-founder, president and chief executive of Trilogy International Partners - 2degrees largest shareholder.
Stanton also co-founded Trilogy and is chairman of its board while Mickels is Trilogy's chief financial officer.
The inclusion of the three Trilogy representatives on the proposed 2degrees board suggests Trilogy will remain a significant shareholder even after the listing.
Stanton is seen as a big wig to have on an NZX-listed company board given he also sits on the boards of Microsoft and Costco in the US.
Mitchell is an investment banker by background and already sits on the board of Heartland Group and Christchurch International Airport while Matthews is former head of marketing for Air New Zealand.
Tunnicliffe is a 30-year IT and telco veteran who was previously chief technology officer of both Vodafone New Zealand and Vodafone Turkey and spend over 15 years with CSC and IBM.
Documents leaked from its non-deal roadshow indicate fund managers were told the Kiwi telco would be valued at around A$1.5b ($1.6b).
University entrance admissions consultants Crimson Education is also said to be mulling an IPO, although if it were to happen it would more likely be next year.
Co-founded by chief executive Jamie Beaton the company has a range of high-profile backers including ex-PM Sir John Key and Sir Stephen Tindall's investment fund K1W1.
According to the Australian Financial Review the company introduced the business to Australian fund managers at an Ord Minnett roadshow last month.
Crimson has been on a fundraising drive of late.
US News & World this week made another US$500,000 (NZ$726,500) investment. Just a few weeks ago Crimson raised US$17.5m through a funding round led by Australia-based global growth and follow-on fund HEAL Partners.
That funding will be used to accelerate Crimson Global Academy's growth and valued the company at US$458m.
However if an IPO went ahead it would more likely be on the ASX than the NZX, or the company could decide to remain private.
The share price of Synlait has rallied strongly since its results announcement on Monday suggesting the $28.5m loss was not as bad as some had expected.
Synlait shares closed last Friday on $3.30 but had risen to $3.71 by market close on Wednesday.
Jarden analysts' Adrian Allbon and Luan Nguyen upgraded the stock from underweight to neutral off the back of the result increasing their target price from $2.90 to $3.60.
The analysts noted that since Synlait's May downgrade the company had made solid progress on its turnaround.
"Solid progress has been evidenced in this result on securing balance sheet time and implementing operational improvements. Covenant waivers were put in place for the FY21 result, new limits introduced for FY22 and sale and leaseback completed for SML Auckland (NZ$30m)."
They were also pleased the company had ruled out the need for additional equity over the
next 12 months.
"Operationally, focus has returned to core ingredients execution, rebuilding nutritionals
around a stable ATM [a2 Milk] assumption, and corrective actions to arrest losses from Talbot Forest and Liquids."
The analysts upgraded their forecast 2022 net profit by 23 per cent and FY23 by 34 per cent to reflect higher confidence.
"We also upgrade our rating to neutral on improved valuation support, lower capital structure risk and better visibility on key milestones to unlock further medium-to-long run upside, albeit still early and subject to execution risk."
But key risks remain from the demand recovery from a2 Milk, commodity price volatility and/or the company's execution of its turnaround plans.
Meanwhile Forsyth Barr analysts Chelsea Leadbetter and Matt Montgomerie were less upbeat on the result.
The revised their target price from $3.45 to $3.55 based on the company's lower debt levels but dropped forecast net profit by 7 per cent for FY22, down 6 per cent in FY23 and 1 per cent in FY24.
"SML has put forward a high-level road map on the recovery path, which appears logical and should support earnings materially ahead of FY21 levels. However, this is not without risk.
"Notably significant internal changes are being made (including a new CEO), leverage is high and visibility on key drivers is low. There is a high margin of error in earnings forecasts, and return on capital is also unlikely to return to prior highs, in our view."
A2 Milk's share price has also rallied in the last week rising from $5.53 on Tuesday September 21 to $6.26 on September 28.
But Castle Point fund manager Stephen Bennie reckons October is shaping to be another tough slog for a2 Milk.
"This time it won't be an earnings downgrade, albeit that can't entirely be ruled out either. No, the likely issue will be the semi-annual MSCI World index rebalance will be calculated using October share prices."
Given its large drop in share price, Bennie says a2 Milk now sits in real danger of being dumped out of the MSCI World.
"This would lead to large selling by passive followers of the MSCI World, of which there are quite a few, estimates vary but it's likely to upwards of 60m shares that would be sold as a result."
Bennie says the problem for a2 Milk during October is that this type of situation can become self-fulfilling as some investors, particularly hedge funds, look to sell ahead of that event and buy back at lower levels from the passive sellers when the index rebalances in November.
"It will be interesting to see how events unfold for a2 Milk in October."
Medicinal cannabis company Ora Pharm is looking to raise $11.5m through a series A funding round targeting wholesale and institutional investors.
The company was set up in 2019 by Zoe Reece, a Kiwi structural engineer who returned home to New Zealand after working for US medical cannabis start-up Curaleaf.
Since then Reece has leased a property in the north Waikato, built a greenhouse and processing facility as well as securing a Medicinal Cannabis license to cultivate and supply medical cannabis.
In August 2020 the company raised seed capital and is now undertaking a funding round through the Syndex exchange - an online platform for proportionally owned assets.
It plans to use proceeds from the offer to expand its New Zealand cultivation and processing facilities and as well as expanding into the US with an over-the-counter CBD (cannabidiol) line, undertake clinical trials in New Zealand and use it for working capital to scale up its operations.
According to its information memorandum for the capital raise the company has a pre-money valuation of $25m.
The capital raising is significant given the value of the company. Rival NZX-listed cannabis company Cannasouth has also been raising capital of late.
Last month Cannasouth raised $4.5m. It has a market capitalisation of $53.6m.
Meanwhile Rua Bioscience, which has a market cap of $58m, announced this week it had secured Good Manufacturing Practice (GMP) certification from Medsafe, enabling it to start the manufacture of its first medicinal cannabis product, a cannabinoid (CBD) oil.
Analysts upgrade airline's rating but are dubious about some of its revenue plans.