The long-awaited IPO of Redcape Hotel Group seems destined to hit the trading floor 30 November, after success securing pre-launch commitments “well in excess” of the minimum funding required.
ASX-listed investment bank Moelis Australia announced a fundraising roadshow in October for Redcape, initially citing plans to raise up to $100m through securities at $1.13.
But a turbulent past month on the markets saw greater prominence given to the minimum $40m needed to move ahead, and further sale of up to $20m through sale of existing securities in the pub company.
Yesterday the group announced the target had been comfortably reached, lodging a Product Disclosure Statement with the Australian Securities and Investments Commission (ASIC).
The Initial Public Offering (IPO) will show 32 assets for the group across New South Wales and Queensland, 31 being freeholds. This includes the three Denfish pubs in southern Sydney signed on mid-October – to be funded by the recent $40m book-build.
Further funds raised will go toward pub assets owned independently by Moelis Australia, which will retain at least 204.2 million securities (37 per cent) of Redcape on completion of the offer.
Debt funding is understood to have also been secured, with ANZ, Westpac and CBA splitting equally a $477m syndicated facility. This sees the entity geared around 38 per cent for an enterprise value of $1.02bn.
It will list at the end of the month with a market capitalisation of $623.2 million at the offer price.
The group’s register already counts 1,150 investors seeing an eight per cent yield, and plans to offer investors a “defensive investment proposition” with earnings forecast at 7.8-8 per cent and annual growth of 3.5-5.8 per cent.
It says the growth strategy is underpinned by core operations, including a management team with collective industry experience of 115 years, through strategic refurbishment, capital expenditure and portfolio recycling, and alternative uses for its considerable real estate land bank.
Revenue for FY19 is projected to be $298.1m, with $68.8m (23.08 per cent) earnings before interest, tax, depreciation and amortisation (EBITDA). Sixty-three per cent of revenue will be from gaming.
“Redcape’s strong business fundamentals are underpinned by a highly scalable management and operating platform,” says Redcape CEO Dan Brady.
“These are the result of an experienced and consistent management team, excellent corporate platforms and systems, and a highly trained and engaged workforce.”
Moelis acquired Redcape mid-2017, and has enlisted Ord Minnett to assist managing The Offer, due to open 12 November, closing 22 November 2018.