Emeco bid to raise $1bn for expansionadmin
A MINING equipment and earthmoving group will add to a gorge of big-dollar market floats when it releases a prospectus today.
It is understood that Perth-based Emeco, which has been expanding rapidly on the back of the resources boom, will seek almost $1 billion in the raising to be used for growth.
The float comes after the $3 billion Snowy Hydro capital raising was axed early this month.
Yet Emeco will still have to compete with the likes of Brisbane tunnel group RiverCity which is seeking $724 million – or even the possible third tranche sale of Telstra. It also faces a share and commodities market which has swung wildly of late.
Emeco’s business includes renting earthmoving equipment to both the mining and heavy construction industries, and selling and maintaining machines and supplying parts.
It has operations in Europe, Asia and North America.
The current major backers of Emeco are private equity firms Archer Capital and Pacific Equity Partners, and its managing director Laurie Freedman also holds a stake.
Archer Capital was once known as GS Private Equity and was one of the private equity backers to take significant profits from the float of Repco.
But Repco’s shares have since dropped. Though valued at $2.52, shortly after listing in October 2003, they closed on Friday at $1.56. PEP is known for a recent buyout of an American company that controlled KFC and Sizzler outlets.
Weekend reports from WA indicated that the prospectus would show the major shareholders “are continuing to stand behind the company and will emerge from the float process retaining substantial shareholdings”.
The amount to be raised is expected to be close to $1 billion. Mr Freedman was quoted this year as saying a float would target funding of between $1.2 and $1.5 billion.
It is understood the joint lead managers for the float are Credit Suisse, Citigroup and UBS.
The latest six-month results for the “Emeco Group” to December reported a profit of $9.7 million. Revenue was $173.5 million.
The firm linked a 12.9 per cent rise in revenue to continued strength in Australia’s mining sector and having an additional plant in Indonesia.
The group had $493 million in debt and assets of $711 million.
The company was founded in 1972 and Mr Freedman has previously said the proceeds would allow Emeco to “pursue its existing growth strategy” which includes significant overseas expansion.