Affinity Loscam IPO gathers speed

Affinity first acquired Loscam in 2005 from DB Capital Partners, paying some A$250 million ($220 million) for around 77% of the asset, in what was already a private equity secondary transaction. The original Loscam MBO in 2003 was Australia’s largest ever secondary MBO up to that date, with GE Capital selling a stake in Loscam to the Pacific Handling Solutions investor group and Deutsche Asset Management.

Investment banks were reportedly first invited to pitch for the Loscam IPO back in November last year – at the time, the likely value of the IPO was given as A$500 million ($441 million). Affinity may be considering other parallel options, and the IPO process might even serve to flush out other potential strategic acquirers. Local groups Brambles and Toll Holdings are already reputed to be eyeing the target. Investment banking firms not involved in the IPO– including some unsuccessful suitors for the mandate, sources suggest – may now be trying to drum up M&A interest in the target, with other private equity firms among possible buyers.

Indeed, AVCJ sources indicate that other GPs may be pushed to consider Loscam and similar secondary opportunities by a relative dearth of privatizations in Oz. “It’s hard to privatize a public company now, because bosses are so nervous about being seen to privatize it too cheaply,” one source said.

However, sources also indicated that: “It’s a good time to do an IPO in Australia, because the market is so buoyant.” Sources ascribed the recent indifferent performance of some private equity-backed flotations to the quality of the assets and the story, rather than the sentiment or capacity of the market itself, with local institutions ready to back a good play. “The super funds are sitting on record amounts of cash,” one noted.

Loscam may be lucky enough to attract this investor appetite. The company is apparently the market leader in many growth markets outside Australia, including almost all Southeast Asian economies, and has considerable expansion potential in China and India. Furthermore, the logistics sector appeals to both private equity and institutional investors as, “A very steady business that throws off tons of cash and allows it to pay a high dividend.”

Affinity Equity Partners, Credit Suisse and Deutsche Bank formally declined to comment to AVCJ.

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• Topics
• Australasia
• Exits
• Industrials
• Affinity Equity Partners