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VNT - Ventia Services Group

Dona Ferentes

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Ventia Services’ initial public offering had been considerably downsized and re-priced to ensure it hit the ASX boards as scheduled this week.

Ventia’s owners, ASX listed CIMIC and private equity firm Apollo Global Management, saw the company raise $438 million and its two big shareholders retain almost all of their shares at the float.

The IPO is at $1.70 a share and values the group at $1.5 billion on a market capitalisation basis or 8.5 times forecast net profit after tax and amortisation for the 2022 calendar year. It would imply an 8.9 per cent dividend yield.

Listing date19 November 2021 ; 1:00 PM AEDT ##
Company contact detailshttps://www.ventia.com/
Principal ActivitiesVentia is one of the largest essential services providers in Australia and New Zealand. Ventia was created in 2015 following the merger of Leighton Contractors Services division, Thiess Services and Visionstream. In 2020, Ventia acquired Broadspectrum (formerly Transfield Services).
GICS industry groupTBA
Issue PriceAUD 1.70
Issue TypeOrdinary Fully Paid Shares
Security codeVNT
Capital to be Raised$438,000,000
Expected offer close date10 November 2021
UnderwriterNot underwritten. Barrenjoey Advisory Pty Limited, J.P. Morgan Securities Australia Limited and Macquarie Capital (Australia) Limited (Joint Lead Managers)
 
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Cimic and Apollo's 70% ( ?) shareholding will be in escrow for the next 15 months at least, so there's not much free stock out in the market.
 

Dona Ferentes

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Opened strongly at $2.08 and is currently $2.11
given the repricing of this IPO to get it away, there is a remarkable consistency in pricing in the 4 days on market ... trading in a range of just a few cents, from $2.08 to $2.14.

The *indicative pricing* was $2.75 to $3.15, the IPO got away at $1.70.

CIMIC and US private equity firm Apollo Global Management – which previously each held 47 per cent – had intended to sell most of their holdings and retain only 22.3 per cent each. CIMIC and Apollo ended up retaining bigger stakes than forecast – 280 million shares each, or equal stakes of 32.8 per cent. (= 65.6%). At least having > 30% free float means the stock is eligible for index inclusion.

Institutions were nervous about the amount of stock CIMIC and Apollo were trying to offload, while others were reluctant to invest in a contracting business (which can report hefty write-downs when contracts go wrong.) Other investors were wary of buying shares in an entity partially owned by CIMIC which has a poor record on transparency (that's a euphemism).
 
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