Crescent-owned insurer shares down 12.5% after Australian IPO

Shares opened at A$1.75 apiece - below the IPO price of A$2 a share - and last traded at A$1.62, valuing the company at just overA$514 million. As a result of the listing, Sydney-based Crescent Capital is reducing its shareholding in the company to 13% from almost 83%, while the company management is cutting its interest from 10.7% to 4.6%.

The private equity firm acquired Cover-More through a A$140 million leveraged buyout in September 2009, investing via Crescent Capital Partners III, a 2006 vintage vehicle with a corpus of A$400 million. Crescent closed its fourth fund in April 2012 at A$500 million.

Cover-More claims to be the largest integrated Australia-based provider of travel insurance and medical assistance. It serves more than 2 million customers each year, taking a 40% share of the Australia and New Zealand travel insurance market. Since Crescent's investment, the company has made bolt-on acquisitions in China and India, and expanded into Southeast Asia.

Cover-More is the fourth PE-backed Australian IPO to have taken place this year and is the latest in a spate of lackluster debuts. Nine Entertainment, which was backed by CVC Capital Partners before being saved from receivership by US hedge fund backers Oaktree Capital Group and Apollo Global Management earlier this year, is currently trading below its offering price of A$2.05 apiece, having last closed A$1.98. Meanwhile, Anchorage Capital Partners-backed electronics retailer Dick Smith Holdings closed flat at A$2.20 a share on its first day of trading earlier this month and last traded at around A$2.08.

Some have fared better. Virtus Health, an Australian in-vitro fertilization company backed by Quadrant Private Equity, closed up 9% at A$6.20 on its first day of trading back in June and last closed at around A$8.76. Oz Forex - which was backed by The Carlyle Group, Accel Partners and Macquarie Group - reached A$2.59 apiece, a 29.5% premium to its issue price of A$2 a share. The stock currently trades at around A$2.70. More PE-backed Australia IPOs are anticipated for the coming year, including healthcare business The Healthscope Group, which is The Carlyle Group and TPG Capital Management, and facilities management firm Spotless Group, owned by Pacific Equity Partners.

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• Topics
• Australasia
• Exits
• Financials
• Exit
• Australia
• Financial Services
• Crescent Capital Partners
• IPO