Emecos IPO attracting strong investor interestadmin
The $1.13 billion float of mining equipment rental company Emeco Holdings Ltd has attracted strong investor interest in its early stages.
A source close to the float said today that the management and shareholders of Perth-based Emeco were delighted with the early support for the IPO.
“Support from the international roadshow is very encouraging and investors like the true global growth prospects on offer,” he said.
“Additional retail demand is expected from the priority offers and note exchange offer.”
The broker firm offer, which closed last week, attracted strong interest from syndicate managers with demand well in excess of the final allocation of $300 million.
“The allocation represents approximately 25 to 30 per cent of the transaction, which is consistent with the register for similar sized ASX industrial companies,” the source said.
“The amounts allocated were consistent with the IPOs of Goodman Fielder and Dyno Nobel.”
Also today, Emeco announced the acquisition of approximately 50 machines from US-based TSM North America Inc for $US11.4 million ($A15.28 million).
Emeco said the acquisition gives it a core inventory of assets for deployment in the Appalachian coal mining region in the United States.
The machines are partially deployed under rental contracts with coal mining companies in Kentucky and West Virginia.
The deal follows Emeco’s $9.7 million acquisition of Orange, NSW-based earthmoving equipment company Bevans last month.
Emeco plans to issue between 450.8 million and 478.7 million shares at a price between $2.10 and $2.50 per share to raise $1.01 billion to $1.13 billion.
The capital will be used to reduce Emeco’s debt to $250 million, leaving it room to borrow more money to fund growth in Australia and overseas markets such as the US.
The retail offer opened on July 3 and closes on July 21 while the institutional offer opens on July 25 and closes the day after, with the final share price and allocations to be announced on July 27.
Upon its expected listing on July 28, Emeco will have a market capitalisation between $1.29 billion and $1.46 billion, making it eligible for inclusion in the benchmark S&P/ASX 200 index.
Emeco is expected to report a $70.3 million net profit in 2006/07, on a pro-forma basis.
Pro-forma earnings before interest and tax (EBIT) is expected to rise 51.7 per cent to $118.4 million next financial year.