Australian Venue Co. has taken the next steps toward its public float, with fund managers this week informing investors the process will look to raise $352 million, while New York financial giants KKR retain their share.
American heavyweight KKR secured its first significant stake in the Australian pub sector in late 2016, acquiring the leasehold aggregating business of Dixon Hospitality.
Brokers Citi and Goldman Sachs have supplied initial terms on the offering, putting Australian Venue Co (AVC) market capitalisation at $903 million. This equates to 15-times AVC’s forecast profit for FY22, offering a four per cent dividend yield.
After announcing the IPO launch last week, Citi and GS will run a bookbuild next week to sell the IPO shares. But KKR will retain all of its stake, expected to hold around 49 per cent of AVC after the float, although it will not be participating in the offer itself.
Capital raised will reportedly go back into the company to pay down loans extended by KKR and senior secured debt, and funding ongoing expansion plans.
The offer is available to sophisticated investors, at $2.33 a share, minimum purchase of $1000.
Investors are being advised that consolidation potential in leasehold pubs is significant; AVC projects up to around 2,000 venues meet its criteria for future acquisition, with returns bolstered by the Group’s substantial buying power, corporate structure and expertise, which have seen it increase yields through strategic CAPEX – typically adding 20 per cent to earnings in the first year after an acquisition.
The prospectus on the AVC IPO will be released next week.