Summerset debuts at 3.6% above IPO price

Tuesday 1st November 2011

Summerset Group, the country’s third biggest retirement village operator, has debuted on the stock exchange 3.6 percent above its initial public offering price.

The shares first traded at $1.45 and were recently at $1.43 on the NZX in the biggest initial public offering since retailer Kathmandu joined the bourse in 2009. They sold in the IPO at $1.40, raising $123.6 million. Some $50 million of that has been poured into the company to fund its growth plans.

“The IPO provides positive encouragement for New Zealand’s capital markets which can only have long-term benefits for individual companies and the economy,” chairman Rob Campbell said in a statement.

The IPO price was at the bottom of the indicative range, with Australia’s Quadrant Private Equity retaining a 56 percent stake in the business. Investors are bracing for an influx of new listings, including Trade Me and the government’s sell-down of energy assets.

Summerset chief executive Norah Barlow said the group is on track to deliver more than 250 units over the coming two years, and has enough land to double its size.

The private equity firm completed the acquisition of Summerset last year when the Overseas Investment Office signed off on the deal, buying the 50 percent it didn’t already own from fund manager AMP Capital Investors New Zealand.

AMP Capital sold up after failing to get the retirement village operator away in a public float in 2007. Quadrant came on board in 2008, investing A$90.5 million of an A$500 million private equity fund.

Craigs Investment Partners, Deutsche Bank and First NZ Capital were joint book-runners, joint lead managers and joint organising participants for the IPO. Forsyth Barr was also appointed a joint lead manager.

Summerset is forecasting pro forma net operating cash flow of $51.9 million and total investment properties worth $632.6 million in the financial year ending Dec. 31, 2012. It expects underlying profit after tax of $6 million this financial year, rising to $9.7 million in 2012.

BusinessDesk.co.nz

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