Adairs listing could raise $220m
The 131 store retail chain is expected to be listed for trading in its shares on June 17.
Goldman Sachs, UBS and Morgans have been seeking bids from institutions for a final price for Adairs shares, a price expected to be between $2.20 and $2.48 per share, which would raise between $201 million and $223 million depending on the final price achieved in the book build, valuing Adairs at more than 15 times net earnings.
Adairs is expected to book sales of more than $230 million in the 2016 financial year with net earnings for that year forecast at $24.4 million.
As part of the listing, private equity firm, Catalyst Investment Managers is expected to retain a 31.7 per cent stake and Brett Blundy’s BB Retail Capital will retain a 9.1 per cent through an escrow facility until Adairs results for the 2016 financial year are released. Catalyst, BB Retail Capital, and management took up shareholdings in Adairs in December 2010.
Adairs has 131 stores across Australia in five store formats and an online sales platform that generates around five per cent of total sales. In information provided to potential investors, Adairs has indicated it plans to open between eight and 12 new stores each year with most of the store development concentrated in NSW and Queensland.
Adairs is one of the leading specialist retailers of manchester and homewares with five brands: Adairs, Adairs Homemaker, Adairs Factory Outlets, Adairs Kids and Urban Home Republic.
The chain sells a range of bed linen, bedding products, towels, cushions, throws, homewares, wall art and furniture. Adairs started in 1918 with a store in Chapel St, Prahran, Victoria and later traded as a mini department store in Camberwell selling manchester, curtains, ladies wear and haberdashery. In 1981 Adairs created a more contemporary boutique format which was launched in Doncaster Shoppingtown and subsequently rolled out nationally.
Blundy’s BB Retail Capital acquired the majority shareholding held by the MacLean family In November 2007. Catalyst Investment Managers bought into Adairs in 2010 with a view to a public listing when market conditions were suitable.
Blundy, whose retail and property interests have extended to Singapore, is capitalising on generally stronger stock market conditions with the Adairs float and another prospective initial public offering of his portfolio of homemaker centres.
Blundy has appointed advisors to assess a float for the 13 homemaker centres that are understood to have a market value of more than $600 million.
As with the Adairs float and the market listing of the Lovisa jewellery chain in December last year, Blundy is expected to retain a shareholding in the homemaker centres.
Lovisa has increased its value from around $245 million when it was first traded on the Australian Stock Exchange to around $320 million.
In the Lovisa float, BB Retail Capital, halved its 82 per cent stake in the retail chain which was started in 2010 by Shane Fallscheer, CEO and a long term colleague of Blundy.
Retail IPOs in vogue
The interest in public listings by retailers has heightened following the successful debuts of the computers, entertainment and technology chain, Dick Smith, Beacon Lighting, pets retailer, Greencross, and the vacuum cleaning chain, Godfreys.
Metcash and Winning Appliances have both examined potential Stock Exchange listings with Metcash likely to proceed with a divestment or trade sale of its automotive division.
Mitre 10 has not proceeded with a mooted float of its Mitre 10 hardware business and Winning Appliances, the 12 store kitchen and laundry appliances retailer, has also shelved its plans to go public.
Other retail chains are also pondering the benefits of tapping into capital investment funds through a public float, including Baby Bunting, the largest retailer in Australia of products for babies and toddlers. The 27 store Baby Bunting chain is well advanced with its plans to float the business after flagging the move last February.
Baby Bunting was founded by the Nadelman family more than 30 years ago with a shop in Balwyn in Melbourne’s eastern suburbs. The chain has developed a large format store for bulky goods precincts and has annual sales of around $175 million with pre-tax earnings of around $12.5 million.
On first half results detailed in February, same store sales growth was running at eight per cent with average annual stores of $6.5 million. The chain sells apparel, consumables, toys, prams, and furniture as part of a range of more than 8000 lines.
Baby Bunting’s largest shareholder is TDM Asset Management, with a 46 per cent stake. The Nadelman family also brought private equity group Blackwood Capital onto the share register in 2007 share sale.
Final details of the Baby Bunting float have not been released but a listing is planned for November and would be expected to raise between $50 million and $70 million for capital return to the current shareholders and further funds for expansion.
This story first appeared in Inside Retail PREMIUM issue 2047. To subscribe, click here.
On Thursday, David Jones' owner Woolworths Holdings announced plans to further reduce floor space in the wake of CO… https://t.co/7Kg47043rk8 hours ago
Good news for streetwear fans! Champion and HoMie are working on another capsule collection after their first one s… https://t.co/5Afp1Vy48V11 hours ago