Apollo-backed Ventia Road Tests Mega IPO in Secret Investor Meetings

Infrastructure services and facilities management giant Ventia has secretly tested listed equity investor appetite about a potential initial public offering and $3.5bn-plus sharemarket listing.

Street Talk can reveal Ventia made a confidential pitch to some of Australia’s biggest fund managers last month, keen to see whether they would be interested in buying shares in the company and at what valuation.

Sources said Ventia had required the funds to sign non-disclosure agreements before the meetings, and wanted to keep the discussions confidential because the IPO deliberations were preliminary. Investment banks are known to be waiting for a formal request for proposal to take the IPO plans further.

It is understood the meetings were arranged by Ventia, rather than its two big shareholders CIMIC Group and private equity firm Apollo Global Management. CIMIC and Apollo each own 47 per cent of the company, while its management team shares the rump stake.

If Ventia were to press ahead with a listing, it would likely to be one of the year’s biggest equity capital markets transactions.

Analysts reckon Ventia could be worth more than $3.5bn as a separately listed company, based on its trailing earnings and the trading multiple of rival Downer Group.

Ventia recorded $3.22bn revenue in 2020, despite disruptions caused by the COVID-19 pandemic, and $265.5m in earnings before interest, tax, depreciation and amortisation. Those numbers were up from $2.26bn revenue and $235.8m earnings in 2019, and were slated to grow substantially in 2021 following a recent acquisition.

A listing could also help Apollo realise its investment after six years invested in Ventia, and give CIMIC’s controlling shareholder Hochtief/ACS options for its stake.

Ventia is one of the largest essential services providers in Australia and New Zealand, operating and maintaining transport, telecommunications and utility infrastructure, managing facilities and property, and overseeing engineering projects and capital works

.The business was owned by CIMIC (previously Leighton Holdings) and operated as Leighton Services until 2015, when Apollo bought in via a 50:50 partnership. Apollo’s acquisition valued Leighton Services at $1.075bn on a 100 per cent basis.

Apollo has since had Credit Suisse test appetite for its stake, although kept finding reasons not to sell.

Most recently, Apollo helped Ventia acquire what was Broadspectrum from Spanish owner Ferrovial last year. Ventia paid $460m for a business that was worth more than $1bn when Ferrovial took it off the ASX in 2016.

Should Ventia want to progress its listing deliberations, it shouldn’t have to look far for advice. The company had five investment banks – Barclays, Citi, Credit Suisse, JPMorgan and UBS – refinance its debt facilities last year.

Source: AFR