Master plan to capitalise on property
THE company that now owns the sites which once housed the failed Masters hardware chain is firming up plans for a float that could value the group at about $1 billion.
Home Consortium hopes to lodge documents with regulators by September, paving the way for its initial public offering and capitalising on the thriving demand for real estate.
Home Consortium’s owners are believed to be in talks to select board members for the company ahead of the float.
The group is run by David Di Pilla, a former UBS investment banker, and backed by Matthew Grounds, the chief executive of the Swiss investment bank’s Australian operations.
It has previously been reported that Home Consortium wants to sell about $150 million to $200 million worth of shares in a float that would give the group a market value of about $1 billion.
The IPO is expected to be pitched at retail, or household, investors rather than institutions. However, sources close to the company said it had not yet been decided whether it would be pitched at retail investors exclusively.
Retail investors will likely be eager to back the deal as they search for stable, high-yielding investment opportunities in a low interest-rate environment, investment bankers believe.
JPMorgan, Credit Suisse and Goldman Sachs are working on the project.
Home Consortium has about 30 freehold properties largely located in east-coast markets and evenly split between Victoria, New South Wales and Queensland.
It also owns three sites located in Perth.
The freehold sites cover about 1.1 million square metres.
Home Consortium is believed to be preparing to receive expressions of interest from potential investors.
The company was created in 2016 when Mr Di Pilla and his backers bought a portfolio of properties from Woolworths that previously housed the failed Masters chain.
At the time, the group outlaid $725 million for the portfolio of 40 Masters freehold outlets, 21 Masters development projects and 21 Masters leasehold stores, and injected capital into the properties to lift their value.
Properties were re-leased, and tenants included Chemist Warehouse, Spotlight and aged-care provider Aurrum.
It was as a joint venture with US hardware retailing heavyweight Lowe’s that Woolworths launched the Masters chain earlier this decade in an attempt to establish a challenger to dominant hardware retailer Bunnings, owned by rival Wesfarmers.
The first Masters store was opened at Braybrook, in Melbourne’s west, in 2011 and Woolworths had planned to have 150 outlets by 2016. Instead, it only opened 63 stores by 2016 as sales fell short of expectations. The group pulled the pin on the chain that year.