Heavy equipment company rides on mining boomadmin
A WEST Australian mining equipment and earthmoving group will add to a gorge of big-dollar stock market floats when it releases a prospectus today.
It is expected that Perth-based Emeco, which has been expanding rapidly on the back of the current 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.
Yet Emeco will still have to compete against the likes of Brisbane tunnel group RiverCity 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 the mining and heavy construction industries and selling and maintaining machines and supplying parts. It also has operations in Europe, Asia and North America.
Emeco’s major backers are private equity firms Archer Capital and Pacific Equity Partners.
Archer Capital was once known as GS Private Equity, and was one of the private equity backers which took significant profits out of the float of Repco.
But Repco’s shares since then have 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 more than 100 KFC outlets in Queensland and 306 Sizzler restaurants worldwide for about $US200 million ($A256 million).
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.
Managing director Laurie Freedman was quoted earlier this year as saying a float would target funding of between $1.2 billion and $1.5 billion.
It is understood that 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.
It linked a 12.9 per cent increase in revenue to continued strength in Australia’s mining sector and having an additional plant in Indonesia.
The group has almost $492.5 million in liabilities and its assets are worth $711.3 million.
The company was founded in 1972 and Mr Freedman has previously said the proceeds will allow Emeco to “pursue its existing growth strategy”, which includes significant overseas expansion.
The float comes after several Australian companies have successfully tapped into the mining boom.