Waco International returns to JSE

INDUSTRIAL company Waco International will be returning to the JSE and is looking to sell 50%70% of the business in an initial public offering before the end of 2015.

INDUSTRIAL company Waco International will be returning to the JSE as its owners aim to sell 50%-70% of the business in an initial public offering before the end of the year.

This comes as a consortium led by private equity group Ethos is looking to sell down its stake through a private placement targeting local and international institutional investors.

Waco International, which has businesses in Australia, New Zealand, the UK, Chile and SA, has not indicated how much it was looking to raise from the listing as it was still busy working on investor road shows.

However, CEO Stephen Goodburn said the company would raise R1bn of bank debt before the listing to pay back a portion of preference shares and existing small bank debt.

“We are looking to sell down between 50%-70% of the business,” Mr Goodburn said in an interview.

Both the private equity shareholders and Waco International managers will sell a portion of their shares.

According to Waco International, the private equity consortium owns 88.2% of the business and 11.8% is held by a management investment trust.

Mr Goodburn said proceeds from the listing would be used to settle the preference share structure and pay the existing shareholders for the equity they are selling in the business.

“We are not generating any cash for the company. All the cash is there to simplify the company structure. There won’t be a preference structure after listing. There will be normal bank debt,” he said.

Mr Goodburn said the private equity investors and management would not sell to another industrial company. For the past 15 years, Waco International, which is involved in building and construction, as well as scaffolding, has had a relationship with private equity.

In 2000, Ethos led a buyout of Waco International and delisted it from the JSE in the largest private equity deal of that year. At that time, the Waco deal had an enterprise value of R2.4bn.

In 2005, Ethos sold Waco International for R5.4bn to private equity consortium CCMP.

But in 2012 CCMP sold the business back to a consortium led by Ethos for an undisclosed amount.

The consortium included RMB Ventures, Standard Bank, Kagiso and Waco’s management.

On the relationship with private equity, Mr Goodburn said: “It’s been very unique. We had a very supportive private equity partner.”

Ethos CEO Stuart MacKenzie said: “Waco’s executive team has done a remarkable job in setting the group up for sustained growth.”