Intellectual property law firm Xenith IP's initial public offering has been re-priced higher as it prepares to raise $55.1 million for its listing, as revealed by Street Talk Online on Sunday.

Broker CBA Equities will run Xenith's institutional books on Monday morning, seeking bids at $2.15 to $2.72 a share or 15-to19-times forecast 2016 financial year profit.

CBA increased the top of the range late last week, after accepting bids through the broker firm offer and as institutional feedback started rolling in. The top of the range was initially $2.58 or 18-times profit.

While the price increase was a bullish sign, it was the sort of move that irks fundies. They were left wondering whether CBA incorrectly priced the deal initially, or if the vendor is getting a bit greedy.

If the float prices at the top of the range – as fundies have been told to expect – Xenith will list with an $89.3 million market capitalisation in mid-November. CBA is seeking bids by midday Monday. 

Elsewhere in equity capital markets, Australia's biggest livestock exporter Wellard Group will kick off the Asian leg of its non-deal roadshow this week.

Family-owned Wellard is seeking to raise $350 million to $400 million to fund growth and pay down debt. The company's two largest subsidiaries are Wellard Rural Exports, which is a livestock exporter and ship owner, and Wellard Agri, a mixed farming land owner and operator.

Investment bank UBS is running the deal while Morgans has been appointed co-lead manager. Wellard has been pitched to fund managers as a logistics business rather than a traditional agricultural stock, and the response from domestic institutions has been solid. 

The deal comes hot on the heels of Australia and China signing a free trade deal and more recently the signing of a deal to allow Australia to export live beef cattle to the country. 

 

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Santos, which is being circled by Brunei-backed Scepter Partners, is closing in on the sale of a 3.6 per cent stake in the prized Papua New Guinea Liquefied Natural Gas project with a transaction tipped to be announced as early as this week.

The deal, which is being financed by Japanese banks with no local involvement, could be the only asset sale Santos does, given the price trading giant Marubeni is willing to pay. Street Talk revealed Marubeni's interest on Friday. 

While the actual value of the 3.6 per cent interest is put at about $800 million, Marubeni is understood to be willing to pay significantly more than that. 

The sell-down from the 13.5 per cent that Santos current holds in PNG LNG would be subject to pre-emptive rights, but Marubeni already holds an indirect interest in PNG through its 21 per cent stake in JX Nippon Oil & Gas-controlled Merlin Petroleum Co, which owns about 4.68 per cent. While other Asian players and the likes of Woodside Petroleum have run the ruler over the stake, Marubeni's offer is said to be miles ahead in terms of value. 

Street Talk can also reveal Santos has had an offer from a private equity consortium [sources pointed at KKR & Co] for at least some of its Cooper Basin assets, as well as interests in the Bass Strait, some NSW coal seam gas tenements and some stray Queensland tenements. However, the proposal is said by sources to be far from binding and at a low-ball price.

Over in Western Australia, Quadrant Energy, backed by Macquarie Capital and Brookfield Asset Management is in the box seat for Santos's interests, while Santos is also understood to have fielded a bid for its Northern Territory assets [but one that is also of limited value] and has received an offer on the offshore Victoria parcel. 

But the value offered by the Marubeni deal on PNG LNG - or any PNG LNG partner that pre-empts it - could allow Santos to drop the other potential deals and instead supplement the proceeds with a rights issue.

After rejecting Scepter's $6.88 a share approach last week, Santos is under increased pressure to come up with an option that offers better value for shareholders

Elsewhere, British technology giant Sage is said to have withdrawn from the sale process for in-play business management software company Reckon.

Reckon responded to a report in Street Talk last week that interested parties were closing in on the firm, confirming it had engaged Macquarie Capital to do a strategic review.

 

 
 

 

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Westpac is quietly pushing ahead with sale preparations for Hastings Funds Management to take advantage of high multiples for specialist infrastructure investors.

Sources said an accounting firm – fingers pointed at Deloitte or EY – was working through vendor due diligence on the infrastructure investment specialist, which Westpac has owned since 2005.

The potential sale comes amid rising demand for infrastructure investment expertise due to a strong pipeline of port and power privatisations and new infrastructure projects.

Listed fund manager Treasury Group and Northern Lights sold their stake in RARE Infrastructure to Legg Mason in July for $200 million.

Legg Mason wants to develop RARE's business, particularly in the US and Europe.

Hastings, which was established in 1994, is wholly-owned by Westpac but operates as an independent subsidiary.

Hastings employees own about 20 percent of the investment group, which has some $7.4 billion invested in infrastructure equity and debt, mostly in Australia.

It has been pushing into Asia, signing a strategic partnership agreement with the investment arm of Hong Kong-based conglomerate China Merchants Group last year to target infrastructure deals up to $5 billion.

China Merchants made its first infrastructure investment in Australia in May 2014 when it teamed up with Hastings to buy the Port of Newcastle for $1.75 billion.

Hastings, which is considering a bid for the Port of Melbourne, has offices in London and New York as well as Singapore. It's also part of a heavyweight consortium looking to bid for TransGrid, the NSW government's $6 billion electricity transmission network.

The potential sale comes as some 40 Hastings employees prepare to receive hefty bonuses from the group's long term incentive scheme.

The scheme was put in place five years ago and the first vesting period comes up at the end of the year.

 

 

 

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You have to wonder what happens to Frasers Property Australia's $2 billion industrial portfolio now that the Singapore-listed parent company is making a big push into residential housing.

Barely one year since Frasers took local property player Australand off the ASX-boards, fund managers and analysts are tipping it won't be long before some of the industrial assets make a comeback, in what would be one of the more high profile property listings mooted for 2016. 

Valuations are high, the initial public offering window is open and there is plenty of cash sitting in investor land for such a deal. You can be sure bankers have made that pitch, and Frasers boss Lim Ee Seng will be thinking about it. [Fort Street Advisers principal Richard Hunt knows the group well, as do Macquarie Capital and Deutsche Bank. Each worked on the Frasers/Australand deal last year].

Frasers has been reworking the diverse portfolio it took over from Australand, including recycling capital as it looks to maintain its development pipeline. And the company saw the demand for industrial assets first hand only two months ago. It had close to a 20 per cent stake in some of GIC Real Estate's portfolio – which was sold to Singapore's Ascendas for $1.1 billion in a hotly-contested auction.

It left Frasers with a $2 billion industrial business at a time when the Singaporean parent company is ramping up its foray into residential housing. The question is whether this division should be spun-off and floated, sold or a capital partner brought in. GIC for instance wavered between a float and an outright sale but decided that the current investment demand for direct property assets was too strong not to sell out. 

While expectations are high it could be back on the ASX-boards by this time next year, don't discount Frasers spinning off part or all of the business into a Singaporean real estate trust either. The company in April for instance sold a Melbourne office tower out of Australand's portfolio to its affiliate Frasers Commercial Trust for $222 million. 

There is also a robust case to hold on to the warehouse and office division as it is. The business offers steady cashflows at a time when returns in Australia's cooling residential housing market have become more unpredictable. 

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It may be in its eighth month now but the Investa Property Group auction is still ticking along.

Unitholders in the $3 billion wholesale Investa Commercial Property Fund will meet early this week and sources confirmed with Street Talk the fund's bid to take over management of the Investa business is under $150 million.

Morgan Stanley's real estate arm, advised by UBS and Morgan Stanley, is said to be warming to ICPF's proposal and the parties are hopeful of agreeing terms pre-Christmas.  

If successful ICPF would internalise and manage the $2.5 billion China Investment Corporation portfolio and the listed Investa Office Fund.

Also advancing is Proprium's $350 million purchase of the Investa Land business, which is due to settle November 2nd. If all goes to plan Morgan Stanley, who acquired Investa Group through one of its property funds (MSREF VI) in 2007, will receive about $3 billion in total from the sale.

Separately, Morgan Stanley's latest global real estate fund, MSREF VIII, has hit a snag over in Perth. The fund's purchase of a half stake in the $240 million Exchange Plaza office complex was postponed at the 11th hour after it couldn't get debt funding.

The sale is ongoing but Morgan Stanley, who kicked off the new property fund this year, may have to lower its loan to value ratio (LVR), which was understood to be about 70 per cent, to satisfy the local banks.

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