Peet & Co is heading towards an Australian Stock Exchange float with a $100 million raising.
Peet & Co is heading towards an Australian Stock Exchange float with a $100 million raising.
PROPERTY development company Peet & Co will be one of Western Australia’s larger listed companies once it completes its sharemarket float next month.
The company is planning to raise up to $100.8 million by selling up to 42 per cent of itself to institutional and retail investors.
Peet and its lead manager UBS have been conducting presentations to institutional investors and stockbrokers over the past couple of weeks to build support for the float.
The float will deliver a massive financial windfall to Peet chairman Tony Lennon.
His family trust will receive about $60 million by selling down its existing stake and will also retain a 35 per cent stake worth $84 million at the issue price.
This would easily put Mr Lennon’s family into the BRW Rich List.
The proceeds to Mr Lennon and other owners of the company, who include Ian and Helen Palmer (20.8 per cent currently) and managing director Warwick Hemsley (17 per cent currently) potentially could have been much larger.
WA Business News has obtained an earlier version of Peet’s investor presentation, dated May 2004, which indicated plans to float a larger holding at a higher price.
The May version had an indicative price range of $1.20 to $1.35 per share, compared with the current price of $1.20.
It also said 117.6 million shares were available under the offer, compared with the current offer of up to 84 million shares.
If the float had proceeded according to the May presentation, the vendors would have raised up to $158 million by selling about 56 per cent of the company (based on the midpoint price) to new investors.
The two versions indicate the offer has become more attractive for investors.
The forecast dividend yield for 2005 has improved from 8.3 per cent to 9.1 per cent while the forecast price earnings multiple has improved from 8.5 times to 7.7 times.
Peet has a remarkable history, having traded continuously for 99 years.
It will be Australia’s largest pure play residential property developer, with a land bank of 24,865 lots, giving it 11 years of land supply.
The company has attracted strong support from investors in its property syndicates, which augurs well for the share float.
It has more than 3,000 active investors in its syndicates, and more than 70 per cent of investors in the most recent syndicate were repeat investors.
In contrast to most other managed investments, Peet markets its syndicates direct to its investor base, with no reliance on financial advisers.
It has closed 10 syndicates since 1997, raising a total of $88 million.
The company’s investor presentation reveals strong growth in both revenue and profit.
Revenue is expected to rise to $95.7 million in 2005 while net profit is forecast to hit $31.1 million.
About 40 per cent of its profit is expected to come from its syndication business, which has an average earnings before interest and tax margin of 71 per cent.
It earns a range of fees from its syndicates including establishment and underwriting fees, ongoing project management fees and performance fees based on marketing and sales.
Company-owned projects are forecast to contribute 58 per cent of profit.
Peet is also pursuing joint venture projects, which will make a small profit contribution in 2005.
Peet believes future growth will come from strong organic growth of its core business, with about two new syndicates a year and the expansion of its joint venture operations.
It says its property is located in growth corridors with demonstrated demand and has an ongoing program to secure new sites.
In addition, it anticipates further growth from development of commercial sites within its estates.
This could include shopping centres, retirement villages and childcare centres.
