Broker network Steadfast expects to make between $160m and $469m from its forthcoming IPO and will use the proceeds to pay debts, vendors and fund further acquisitions.
The $469m figure is based on the indicative share range and the indicative price range which, as Insurance Business reported yesterday, is between $1 and $1.20.
According to the prospectus, lodged on Friday, the proceeds will be used to repay $35.4m of debt, pay $22.9m to cover the costs associated with the IPO and the restructure proposal; to pay between $77.1m and $385.7m to vendors under the acquisition; and increase cash and cash equivalents to $25m.
The cluster group expects a market capitalisation of between $545m and $622m. Reports suggest the IPO is likely to be the largest one the country has seen in several years.
The final share price will be determined at the conclusion of the book build, expected to be around 30 July. The IPO will not proceed if the minimum price is below $1. The final price will be based on a number of factors including the level of demands for share, the objective of maximising the proceeds of the offer, and “the desire for an orderly secondary market in the shares”.
Steadfast CEO Robert Kelly said, in a media briefing yesterday, the group had not “locked down any cornerstone investors” but he added: “We’ve had a lot of enquiries from people who want to be such investors.
“After 11 July when the final share allocation is put out, then the institutions will have a fair understanding of what percentage of share are available in the market,” he continued. “That process will mature from 11 July until the bookbuild on 30 July, during that period, I’m sure people will come forward with their appetite.”
Online health insurance broker and comparison service iSelect made its debut on ASX late last month but its debut falling below expectations. Kelly fended off concerns that Steadfast will be subjected to the same fate, referring to the two businesses “as completely different animals”. Instead he drew on a comparison with listed broker network Austbrokers.
“Steadfast and Austbrokers are very similar businesses and we operate in a very attractive market where there is room to grow. Our backgrounds are different – Austbrokers developed first as a consolidator, and Steadfast as a support network. The consolidation component we have put together is an extension of the support that we offer.”
Austbrokers has made five transactions this calendar year, with the latest one being the acquisition of WRI, a former Steadfast member. Steadfast also has no plans to step off the acquisition trail.
“We put the IPO together to facilitate the acquisition of equity interests in as many brokers who wanted to participate,” Kelly said. “It’s a pretty exciting time for our group.”
“Steadfast is in a great position to grow through acquisitions. For most cases we are the natural acquirer of further interests in brokers.”
Kelly conceded that brokers may sell outside the group as some may value certain acquisitions more than Steadfast does.
But he added: “We will stick diligently to our criteria. I expect there will be the potential for some people to sell outside the group. For the most part, most people will come to us a natural acquirer.”