Worries over Dick Smith listing


dicksmithAnchorage Capital’s forthcoming listing of Dick Smith on the Australian Stock Exchange (ASX) is worrying institutional investors.

An IPO or sale could be opportunistic for sellers and risky for potential purchasers, according to experts in The Australian today.

“To turn it around in such a short time does make you ask how much has changed,” says Robert Penaloza, head of Australian equities at Aberdeen Investment Management.

“For the amount they paid, they can make money by making some very simple changes and then spinning it off.

“Whether it would make money is uncertain.”

Dick Smith was confirmed last month to have appointed Goldman Sachs and Macquarie Capital to explore its options, including a sale and public listing.

It is likely to be floated, with an initial public offer (IPO) to value the chain somewhere between $550 million and $620 million.

Anchorage Capital bought Dick Smith from Woolworths in September 2012 for just $20 million, plus a proceeds buyout of $74 million.

Dick Smith made $80 million before interest, tax, and depreciation in the year to June.

The Australian-based retailer has been facing stiff competition from JB Hi-Fi in recent years, which also has analysts worried.

“JB Hi-Fi is going from strength to strength, so they want to make hay while the sun shines. It’s the quickest few hundred million they’ll ever make.”

Retailer still moving forward

Dick Smith this month launched a new concept, Move, at Sydney’s Westfield Bondi Junction.

The first of its kind in the Australian consumer electronics space, Move sells fashion inspired accessories, computers, and mobile devices.

CEO Nick Abboud last month flagged a significant expansion plan of 30 stores for Move.

Dick Smith last month struck an exclusive deal with David Jones to run the department store’s electronics business.

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