Non-bank lender Liberty Financial is weighing strategic options, including a listing on the ASX boards. 

Street Talk can reveal the financial services company drafted in JPMorgan several months ago to assist with a review of the Melbourne-based business. The bank is assessing a number of options for Liberty which include an initial public offering or seeking out a private investor for the group.

Non-conforming lenders, which typically provide finance to borrowers that don't meet the criteria of the big banks, are benefiting from tougher regulatory controls around bank lending.

Liberty's profit before tax increased 11 per cent to $73.7 million for the year ended June 30 2016, as loan originations hit $2.5 billion. The lender, which began with a focus on non-conforming home loans has branched into car and business loans, and has total assets of more than $5 billion. 

Still, the IPO market has been fickle this year and Liberty's opaque structure may provide challenges to a run at the ASX.

A company associated with the head of Liberty was last year ordered to repay a debt to Macquarie Group, after resisting the repayment through more than five years in litigation.

And sale conditions have also not been ideal in the trade space. Last year, non-bank lender Firstmac shelved sale plans after bankers Goldman Sachs unsuccessfully solicited interest for Queensland home loan magnate Kim Cannon's enterprise. 

Liberty's board is headed by chairman Richard Longes (also chairman of Investa Office Fund and formally on the boards of GPT and Boral), while founder Sherman Ma remains an executive director after handing over the chief executive role to James Boyle late last year. Rounding out the board are former Insurance Australia Group executive Leona Murphy and former ANZ Banking Group executive Peter Hawkins.

US-born Ma came to Australia in the 1990s with management consultancy McKinsey & Co and launched Liberty in 1997, backed by silent partners. 

Four years ago, his wealth was estimated at $100 million by the BRW Young Rich List. 

It also isn't the first time Liberty has considered listing on the ASX. Prior to the global financial crisis, Ma drafted in banks to weigh options including an IPO. Those plans were derailed by the fallout of the GFC which saw the domestic non-conforming loan industry seize up, in line with global markets. 

Lenders such as Liberty and rival Bluestone stopped writing loans during that period.

This column understands Bluestone is undertaking its latest securitisation transaction at an offer size of $250 million to take advantage of improved funding conditions. 

The Sapphire XVI deal is being arranged by Macquarie while Commonwealth Bank of Australia is also on the ticket. 

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The healthcare sector has kept investment bankers busy in the past five years and the deal flow is not abating. 

Suitors readying to bid for Healthscope's medical centres business have received a sale flyer and are gearing up for the formal start of an auction.

Following Street Talk's earlier revelations this week, sell-side adviser UBS has told interested parties the more detailed information memorandum will land within two weeks.

The divestment comes as new Healthscope managing director Gordon Ballantyne gets his feet under the desk and pulls the auction trigger. The 50-odd medical centres may fetch $100 million to $120 million. 

But bankers hoping for a quick start to the sale of Australian radiology business, I-MED Network, may be disappointed. 

This column understands Swedish private equity firm EQT isn't in a rush for the exit and suitors have been advised an auction won't begin for some months. Morgan Stanley and Rothschild are managing the sale.

Sources said I-MED was keen to compile its fiscal year-end accounts and assess changes announced in the federal budget which are generally seen as beneficial to the radiology industry. Shares in listed group Integral Diagnostics, for example, have rallied strongly post the budget.

Also in health, the sale of iNova Pharmaceuticals is at the pointy end as private equity firms The Carlyle Group and Pacific Equity Partners look to seal a deal after being granted exclusivity by Valeant Pharmaceuticals. The sale of cancer care group Icon is also nearing a climax. 

 

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If there is one thing that could de-rail Origin Energy's plans for another ASX-listed spin-off, it is Beach Energy. 

The $1.27 billion Beach is the most likely buyer of Origin's Lattice Energy and it will take either a strong bid from either a rival buyer or the initial public offering path to knock it off. 

As the auction heats up, Street Talk understands that Beach Energy has drafted in another investment banking adviser. 

Sources said Luminis Partners had been hired to advise Beach Energy's board and help keep its bulge bracket advisers honest. 

While Beach Energy locked in Credit Suisse's team to run the bid months ago, any offer would likely require a big funding package, which is where Luminis' expertise is expected to come in.

Luminis Partners is expected to help the board decide on the best course of action when it comes to both the bid and funding options. Lattice Energy is expected to be worth $1.5 billion to $2 billion, which would represent a big bite for the mid-market oil and gas stock. 

A Beach Energy spokeswoman declined to comment on Wednesday. 

Fund managers expect Beach Energy to bid hard for the assets, which fit within the Seven Group-backed company's acquisition strategy. 

RBC Capital Markets analysts recently told clients that Beach Energy could use a combination of debt and "what we currently consider to be relatively fully valued scrip". Since then, though, Beach shares have dropped from 71¢ to be trading at 66¢ on Wednesday. 

The analysts said Beach Energy had both the means and motivation to make the deal work, and said a deal could be done with an $800 million to $1 billion debt package and $700 million to $900 million equity raising. 

Such a raising would represent between 50 per cent and 70 per cent of Beach Energy's existing shares on issue, and be the second largest follow-on raising for an M&A deal in Australia this year.

As for Luminis Partners, it is not known as an oil and gas advisory house, however has close ties to Origin. 

The firm advised Origin on its $NZ1.8 billion divestment of a stake in NZ power supplier Contact Energy in 2015. 

Beach Energy is expected to come up against ASX-listed rival Senex Energy and a bunch of offshore private equity buyers in its bid for Origin's assets, which includes stakes in the Otway, BassGas, Halladale and Cooper Basin fields.

The alternative is an IPO bid, put together by Macquarie Capital, UBS and Bank of America Merrill Lynch. 

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It's a two horse race for the fifth and final leg of Origin Energy's infrastructure asset sales program, the Darling Downs gas pipelines.

Street Talk understands Canada's ATCO Australia is up against another pipeline owner after a handful of parties submitted binding bids more than one week ago. 

ATCO Australia boss Bobbi Lambright, advised by JPMorgan, has set up a new entity ahead of the potential deal called ATCO Australia Pipelines Pty Ltd and industry sources expect an outcome by  the end of the week. 

ATCO was expected to come up against ASX-listed pipelines giant APA Group and offshore owned Jemena and Cheung Kong Infrastructure at auction. However, at least two of those are said to have dropped out of the race. 

The auction has been a keen talking point on the sidelines of the APPEA conference in Perth this week. 

An ATCO Australia spokesman declined to comment on Wednesday. 

Up for grabs are three separate high pressure gas pipelines that service some of the Origin-backed APLNG's upstream gas fields in the Surat Basin and Origin's Darling Downs Power Station.

The pipelines have a total length of 292 kilometres and are expected to be worth $300 million to $400 million. Bank of America Merrill Lynch is running the auction for Origin.

The sale wraps up the fifth and final leg of Origin's infrastructure assets program announced in September 2015. 

The sales, along with the sale of its non-operated interests in the Cooper and Perth basins, were expected to fetch up to $800 million. Origin subsequently pulled the gas deals and instead is forging ahead with the spin-off of a larger portfolio of upstream assets. 

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Don't forget about the V8 Supercars team owners as Archer Capital seeks a buyer for the sport. 

While the teams may own a minority 35 per cent stake in V8 Supercars, they do not see themselves as either a minority stakeholder in the sport or its pending sale. 

With indicative bids set to land in front of Archer's adviser - Robert Mactier from UBS - on Thursday, Street Talk understands the teams have a put option which hands them some level of control in the sale process. 

The option means that if Archer finds a big enough offer for its 65 per cent stake, the teams can vend their combined 35 per cent into the bid. 

Alternatively, if Archer struggles to squeeze a decent price out of the buyers, the teams could even think about taking back the sport in its entirety. [Interestingly, they've said to even consider a management buyout for Archer's 65 per cent stake]. 

As one source said, the put option basically gives the teams the right to piggy back on whatever deal gets struck for Archer's 65 pr cent. 

Five bidders are said to be in the process, although as always there are said to be varying levels of interest. 

Either way, it seems unlikely Archer will achieve the $300 million valuation its own bid put on the sport in 2011. 

Archer investors don't seem to be too fazed by the process. The V8s stake is held in Archer's fourth fund, which limited partner sources said had already returned more than 1.5 times money for investors. 

Fund four's biggest wins included private hospital owner Healthecare, which returned an estimated 4-times money for investors, MYOB (3.5x) and Ausfuel (4x). It also had small follow-on stakes in Rebel Group and iNova Pharmaceuticals.

 

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