New Zealand-based wood products supplier Carter Holt Harvey has said it is preparing for an initial public offering, which would involve listing on both the Australian and New Zealand stock exchanges. Sources: The Australian, Radio New Zealand, NBR
The announcement comes after months of planning.
Last month, the company appointed Credit Suisse, First NZ Capital, Deutsche Bank, Deutsche Craigs and Forsyth Barr to manage the sale.
The company will likely lodge its prospectus in June, with a listing within a month of that.
The IPO is expected to value the company at around $1 billion, with current owner The Rank Group retaining a significant stake.
Carter Holt’s business comprises of three divisions — Woodproducts Australia, Woodproducts New Zealand and Carters Building Supplies.
It employs around 5000 people and has annual sales of about $2.1 billion.
The company is part of New Zealand billionaire Graeme Hart’s Rank Group.
Mr Hart has indicated he would sell up to 60 percent of the company, retaining a 40 percent stake.
Under Mr Hart’s leadership, Carter Holt sold its pulp and paper assets to focus on supplying wood products to housing and construction markets in Australia and New Zealand.
The Rank Group paid $NZ3.31 billion for Carter Holt in 2006, and has since sold off the company’s forestry and farm land and its pulp and paper unit, leaving a smaller business focused on wood products and building supplies.
“There would be pretty good demand for it,” said Daniel Metcalfe, senior client adviser at OMF. “It’s a very tangible business, with a strong New Zealand history and there hasn’t been an issue of this size for quite some time so people will be keen to diversify their portfolios and expand the New Zealand share ownership.”
Professional investment funds will probably also buy the stock because of the large size of the company, Mr Metcalfe said.
Carter Holt competes with publicly listed Fletcher Building in the building products distribution market with their respective Carters Building Supplies and Placemakers outlets, and both manufacture building products on both sides of the Tasman.
Carter has about 50 building supply stores in New Zealand to Fletcher’s 58 Placemakers outlets.
They also compete with Bunnings, Mitre 10 and ITM.
New Zealand government figures published last month showed New Zealand building consents, a measure of demand for building supplies, rose 12% to 25,038, in the year through March, with new house permits rising 3% to 18,012.
According to information published in The Australian, it is the market leader in Australasia for timber, engineered wood products and structural plywood. It is ranked first in Australia for MDF, particle board and flooring and second in those products in New Zealand to Fletcher.
Mr Metcalfe noted the building supplies market is “increasingly competitive”.
Carter Holt doesn’t publish details of its financial performance and investors said it would be difficult to value the company until the prospectus was made public. Media reports speculated the company had revenue of about $NZ2 billion and would likely offer “reasonable dividends” to lure investors.
Mr Hart, New Zealand’s richest man, specialises in buying then restructuring businesses and reselling them.
Metcalfe estimates Rank Group has sold around $NZ3.1 billion of Carter Holt assets, close to the price of Hart’s original investment, but he may have been forced to hold the asset for longer than he wanted because of weak conditions during the global financial crisis.
“He’s clearly going to make a decent profit out of it,” Mr Metcalfe said.
Mr Hart has been looking across all his portfolio of investments with a view to selling down assets, including a strategic review by his Reynolds Group Holdings of its Evergreen, Closures and SIG units last year.
