BUSINESS Viva float looming as biggest in years
VIVA Energy is expected to list on the ASX next month with a market capitalisation of about $ 5 billion, making it Australia’s biggest initial public offering since 2014.
The IPO of the refinery, fuel supply and petrol stations business is expected to generate proceeds of up to $ 3 billion for its owners, led by global energy trader Vitol SA, when it lists on July 13.
Vitol and its partners expect to hold on to between 40 per cent and 50 per cent of the total shares in Viva following the offer, according to float documents released on Wednesday.
It would be the biggest IPO since Medibank’s $ 5.7 billion float in 2014. It comes amid a shake- up of Australia’s petrol retailing, with BP looking to take over top grocer Woolworths’ petrol stations and Caltex Australia ditching its franchise model to run its own operations.
Viva Energy was created when Vitol and its partners bought a refinery at Geelong near Melbourne and petrol stations from Royal Dutch Shell in 2014. It has since spent more than $ 1 billion improving the business, including buying Shell’s jet fuel operations.
Viva’s earnings grew 19 per cent between 2015 and 2017, chairman Robert Hill said in the prospectus. “We have plans for the continued expansion of our retail network and see opportunities to benefit from growth in key commercial sectors,” Mr Hill said.
Petrol sales, which make up about 25 per cent of the business, are expected to hold steady or grow only slightly, with car fuel efficiency gains being offset by population growth and rising vehicle ownership, Viva chief executive Scott Wyatt said.
However, the company sees good prospects in aviation fuel, with strong growth in air travel, especially with Chinese airlines coming into Australia and Viva Energy having pipelines into the country’s two fastest growing airports – Sydney and Melbourne.
The float is being priced at between $ 2.50 and $ 2.65 a share, or between 13.1 and 13.9 times forecast net profit for the year to June 2019. By comparison, its closest listed rival, Caltex Australia, is trading on a forward price- to- earnings multiple of 13.2.
Bank of America Merrill Lynch, Deutsche Bank and UBS are running the IPO.