Wellington, Oct 20 NZPA - The owners of Christchurch-based outdoor lifestyle retailer Kathmandu are thought to be looking to take advantage of a buoyant Australian sharemarket as they float the company.
Yesterday it was announced the 200 million shares being sold will be listed in Australia and New Zealand, with the final price to be set on November 12 after a bookbuild process with institutional shareholders.
An indicative range of $A1.65 to $A1.90 or $NZ2.01 to $NZ2.32 was given.
Private equity investors Goldman Sachs JBWere and Quadrant Capital, who bought the company off founder Jan Cameron, will either sell down to 15 percent or exit, depending on demand.
Andrew Kelleher of ASB Securities said private equity bought and sold companies when the opportunity arose.
He suspected the owners were selling now "because they can", with the Australian market, in particular, being buoyant.
"It's a solid company, they get a great gross profit margin because they make the gear and then they sell it. So on that front they're a good investment opportunity," Mr Kelleher told Radio New Zealand today.
"But I suspect that growth outside of Australasia for them would be difficult. Most of the other retailers who tried to expand out of Australasia have found it hard."
His main issue was that retail investors did not know the price they would be investing at because the price was not set until after they had to front up with their money, and that was a concern.
The float promoters say the current owners opened 36 new stores in better locations and invested in information technology over more than three years of ownership.
The stores sell 60 percent clothing and 40 percent equipment. Executives admitted 60 percent of goods are sold on sale, but said "the sale is part of our DNA".
The growth story is centred on plans for new stores in Australia and New Zealand. A total of 70 new stores are planned, of which 18 are in New Zealand.
The company is not concentrating on expanding in Britain, but is keeping a bigger roll-out there open as an option.
It is discouraging comparison with the float in Australia of department store Myer, saying a department store was a different business to a vertically integrated retailer of lifestyle products.
Goldman Sachs JBWere and Macquarie Group Ltd are the lead managers for Kathmandu's offer.
The company will have a market capitalisation between $402m and $463m. The price is between 13 times and 15 times earnings and the dividend payout ratio is 55 percent.
The retail offer runs between October 27 and November 6 with an institutional bookbuild on November 10 to November 11.
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