It was one of Australasia's better sharemarket floats of 2021.
At the start, there was conjecture as to whether steel distributor Vulcan Steel's IPO price had been pitched too high at A$7.10 but the naysayers were quickly proved wrong, the stock rallying to A$9.50 within a few months.
The dual-listed company, which started life as a garage in East Tamaki, two trucks and a Portacom, is now worth over $1 billion.
In the rough and tumble world of steel, Vulcan challenged the Steel and Tube-Fletcher duopoly to emerge as a meaningful third player, later going on to make inroads across the Tasman.
For former chairman Peter Wells, who this month stepped down from the board of the company he founded, the journey has all been about incremental steps.
After just a year on the NZX and ASX, Vulcan's annual profit increased by 91 per cent to $194 million while its revenue rose 33 per cent to $972.7m.
Wells himself said the company's explosive earnings performance was "unbelievable" - reflecting in part the volatility of the times.
"I've been doing this for a long time, in CEO roles, and the last couple of years have been nothing if not a new experience."
Competitor Steel and Tube also had a strong June year, with its net profit almost doubling to $30.2m.
As Wells sees it, Vulcan was "just in the right place at the right time".
"Everyone has felt those tailwinds and it's down to two things.
"One, Covid, which just created an atmosphere that is still difficult to describe even now.
"The other thing is the huge printing of money that has happened in the Western world."
Wells said the company's latest result was clearly over and above expectations.
"It's hard for us to work out how much is tailwind and how much is our ability.
"I will be very interested as an investor and as a market watcher to see how the rest of this year pans out.
"For this year, the general view is that what has happened to those tailwinds? Have they become headwinds?
"We just can't see that at the moment. We definitely can't."
In its forward-looking statement, Vulcan said rising interest rates and ongoing Covid-19 disruptions in some major markets were likely to temper global economic activity and demand for steel and metal products.
For Australia and New Zealand, the company expects a more challenging industry environment.
"Some normalisation in industry margins will likely occur in 2023," it said.
A life in steel
Wells started what was to be a lifetime in steel with Fletcher Steel in 1968, in sales roles, for four-and-a half years.
Wells and wife Mary then went overseas for six years, ending up doing two stints in South Africa with a startup called Trident - which went on to become a multibillion-dollar company - as employee number 4.
At Trident, the young Wells experienced building a business from scratch, which was to have an influence on him later in life.
He then went on to work with British Rolling Mills - a coil producer - in the UK.
Then it was back to New Zealand, where he started with Swedish multinational steel giant Sandvik.
Wells spent 10 years with Sandvik and he credits the company for how his career in steel panned out.
By 32 he was managing director of Sandvik in New Zealand.
Sandvik eventually put Wells through the prestigious Stockholm School of Economics in 1985 and 86.
By that stage he had been doing a lot of M&A work for the Swedish firm in America.
"I picked up a lot of experience from an entrepreneurial point of view, within the multinational."
Then came the 1987 sharemarket crash, a tumultuous year for most businesses.
Post-crash, a company called Mount Somers - a remnant of the Rada-NZ Forest Products empire - was put up for sale.
Two friends of Wells from his time at Fletchers made an approach.
"They phoned me at Sandvik and said if you run it we will finance you into a third of the business - so we did that.
"That business [Mt Somers] was bankrupt and it took us 12 months of nervous anxiety, but we did turn it around."
The company became Stewart Steel, after one of the partners, and established a presence in Auckland, Christchurch and Hamilton.
They then received an offer by Steel and Tube - then controlled by Tubemakers of Australia.
"Things were still pretty tough then and the two partners were pretty keen to take the offer.
"I was very reluctant and almost heartbroken over the circumstances.
"But anyway it happened and I obviously made some capital.
"I was able to negotiate a three-year restraint of trade deal with the then Steel and Tube CEO, the late Nick Calavrias."
Calavrias had himself owned his own business which Steel and Tube had bought before they made him CEO.
"That business proved to be very good for me from an experience point of view."
The Stewart Steel deal meant Wells was locked into a three-year restraint of trade deal and left on the day it fell due in 1995.
With a "nucleus" of family members, he started Vulcan Steel.
Wells Steel?
"I didn't want it to be Wells Steel. I had seen enough of family businesses in the States to put me off that."
Vulcan started off with a prospectus and a capital raise.
Wells had 25 per cent of the company and there was strict governance oversight from the outset.
By the time Vulcan emerged on the scene, New Zealand steel distribution was a duopoly between Steel and Tube and Fletcher.
"So there was a vacuum.
"Even though they were reasonably tough times, people were looking for a third option, so we grew very quickly."
Within three years Vulcan was a major third party in New Zealand steel distribution.
By 2000, the company was big enough to start looking for opportunities in Australia.
"We were already extremely profitable and developing a lot of cash.
"Obviously I had to run it past the board but they agreed that we could afford to take the risk."
It started off with buying land in Victoria where Vulcan built a distribution hub and bought a company in Sydney called Horan Steel.
By 2004 the company was trading "in a reasonable way" - but not by Australian standards.
"But we were making money - we were in the two main states - so it gave us a good platform."
Vulcan went on to make some substantial investments in Australia, buying a company in Brisbane and setting up its own greenfields site there.
In 2011 Vulcan was approached by the old firm - Sandvik - which wanted to sell its stainless steel distribution business in Australia and New Zealand.
Long story short, Vulcan did the deal in 2014 "pretty much at NTA [net tangible asset value]."
Wells moved out of the business in 2016 but remained as chairman.
Today the company is run by CEO Rhys Jones and chief financial officer Kar Yue Yeo.
Vulcan has since gone on to buy engineering steel companies Australian Global Metals and Interlloy, which were merged into Vulcan's engineering steel subsidiary.
The acquisitions mean Vulcan is now involved in stainless and engineering steels.
Each have differences in scale and in the type of customer.
In July, Vulcan completed the purchase of Ullrich Aluminium for $165m.
"So if you look at the company, it is diversified from what our original goals were."
Going public
Wells said it was not a "black or white" decision to list the company.
"On balance, it was the next thing to do.
"It has taken a lot of work - more than I had anticipated I might say - but like a lot of things it pays to do it properly.
"We have accomplished it and have come out the other side - so most of that noise has gone now."
Pre-float, Vulcan had about 50 shareholders.
The float involved the shareholders selling down their stakes by 40 per cent.
Most of the company's shareholders have come out of the escrow agreement, so they can trade their remaining shares.
Wells - whose holding is now 14 per cent - and a handful of other shareholders will remain in escrow until August next year.
Steel traps
Wells said the Mount Somers experience showed him that steel distribution is very difficult to do within a public "ensemble" of companies.
"It is the sort of business that is really daily, and you have to run it daily.
"So if you want to put a general manager in there and run it as part of a holding company, it is very difficult.
"That particular business was broke at the time it was sold at around 40 per cent of its NTA - so that shows you the demise that it was in."
As long-term followers of the NZX-listed Steel and Tube will attest, the steel business is not an easy business to be involved in.
Wells says there are two or three reasons for that.
"The first is its physical nature - so for that reason it is quite difficult to buy and then to on sell."
Steel mills globally are billion-dollar investments.
In the old days, they were often government-owned because of their capital nature.
"They didn't want a lot of customers.
"It's not like a supermarket.
"You don't just rock up and buy the product, and it's all done by a bit of black science.
"There are no rules - it just depends country by country - but you have to put forward your CV, or your credentials, and they pretty much revolve around experience and money.
"On the other side, when you are selling it, you have to be able to get it to a wide geography and have the scale and the ability to do that effectively and cost efficiently.
"Today, within Vulcan, it is a huge plus for us to be able to bring to the market 150 trucks with 70 odd locations spread right across Australasia."
Wells said when the company started it was a small shed in East Tamaki with a Portacom and two trucks. The key to achieving success has been about making progress in small increments.
He is a proponent of having things done in-house rather than outsourcing.
"We are the only ones with our own trucking fleet and our IT is done in-house.
"A public company with a conventional CEO would like to subcontract because it gets rid of the responsibility.
"Trucking businesses are difficult to run, especially at scale, and then when you take IT it is notoriously career-busting.
"So to subcontract that to a supposed expert rather than build your own system is easier, but in my experience it's not as good as in-house when you make the comparison."
Aussie foray
Breaking into the Australian scene was not easy.
By the time Vulcan was looking to expand there, it was already a mature market.
"It's the Aussie thing. They really don't like competition, least of all from this side of the ditch.
"Really, it gets back to that same thing. It is those small, incremental steps.
"So you really don't want any big bang solutions because you can't support it."
Vulcan started in two big states - New South Wales and Victoria - then in smaller locations, buying businesses along the way.
Today, in some areas in Australia, it has 40 per cent market share and in others, it is as low as 2 per cent.
Looking back, the Sandvik experience was transformational for the young Wells.
"I was a baby without doubt - naive - but it was a great learning experience and they obviously had a bit of faith in me."
Stepping back, Wells sees Vulcan as being a modern, low-cost distribution business with very low capital.
"If you compare it to a steel mill it's the exact opposite.
"So when I look at it in that regard, to lump it in with the steel business is not the right thing to do, so I think over time Vulcan will prove that."
Wells still has 14 per cent of the company in an investment trust until next year "but I'm not sure if I will be selling quickly".
Post Vulcan, Wells - a keen water-sportsman - intends to spend time on some community projects and on investment.
In terms of taking a company from a one-shed, two-truck operation in East Tamaki to where it is today, Wells says it's been a fantastic journey.
"I'm not shouting it from the rooftops, but we do feel a sense of achievement," he says.
"That's for sure."
