Vocus Group is not the only game in town for KKR.

As first reported by Street Talk on Wednesday, the private equity investor remains in talks to acquire a controlling stake in pub owner Dixon Hospitality Group. 

Sources said Dixon's owners, spearheaded by chief executive and former Spotless Group boss Bruce Dixon, and KKR were working towards a signed deal by the end of next week. 

Dixon Hospitality Group is expected to be worth $150 million to $200 million, including debt. The company's owners are seeking a private equity investor to tip in growth capital and bring the group back to the ASX boards in a couple of years' time. 

CHAMP Private Equity also considered a bid for Dixon but dropped out of the process in May. 

Dixon Hospitality cancelled plans for an initial public offering in April, after testing listed investor appetite for the deal and then receiving inbound approaches from private equity.

During the IPO pre-marketing roadshow, sponsor broker Morgans valued the company at up to $227 million and said it expected Dixon to report $199.9 million revenue in the 2018 financial year and $13.5 million profit. 

Dixon owns 50 leasehold venues, primarily in Sydney, Melbourne and Brisbane.

 

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Lazard Australia investment banker David Wills is joining technology company and one-time initial public offering hopeful, InfoTrack. 

Wills, who is a director in Lazard's investment banking team in Sydney, is understood to be joining InfoTrack as head of business development and will start at the firm in August. 

It's an interesting time to be joining InfoTrack. 

Having shelved IPO plans, InfoTrack is believed to be on the growth trail and targeting both organic and M&A opportunities. 

InfoTrack owns a proprietary software platform that law firms and conveyancers to search for information including property titles, plans and dealings, as well as offering services such as settlements, stamping and document registrations. Lazard advised InfoTrack on its listing plans. 

Wills also worked on deals including Hastings and First State Super's acquisition of NSW's land titles registry earlier this year, First State Super's acquisition of the StatePlus financial planning business last year and Ramsay Health Care's acquisition of French hospital operator Generale de Sante in 2014. 

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Conditions around KKR's bid for Vocus Group means Vocus is unlikely to let the private equity suitor in for a closer look at its books. 

That's the view of Citi analysts on Wednesday morning, who said KKR's bid was aimed at buying underperforming assets at an attractive price. 

Citi said the offer valued Vocus at 8-times forecast 2018 financial year earnings, however told clients that it may be better to use normalised earnings which would derive a 7.4-times multiple. 

"Given the highly conditional nature of the preliminary offer, we think this is unlikely to be sufficient for VOC to grant due diligence," the analysts said in a note to clients. 

"With the current share price depressed due to recent earnings downgrades and capex commitments bringing debt covenants into play, in our view the key motivation is the opportunity to buy underperforming assets at an attractive price.

"There is scope for a breakup, NZ (20% of revenue) & Aus Consumer (47%) could be split out, in our view the key motivation is the opportunity to fix the issues in the Aus Corporate & Wholesale business and boost earnings by properly integrating the M2 customer base with the network assets of the original Vocus, Amcom & Nextgen." 

KKR stumped up a $3.50 a share indicative bid on Tuesday night, as revealed by Street Talk, subject to a number of conditions including due diligence and Vocus not downgrading earnings. 

Vocus told shareholders on Wednesday morning that it would review the indicative bid. 

Evans & Partners analysts told clients the bid valued Vocus at 8.6-times current year earnings, while Vocus itself had been paying up to 14-times for recent acquisitions. 

Vocus shares were trading up 19.6 per cent to $3.42 at lunchtime on Wednesday. 

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Goldman Sachs has promoted former Reserve Bank of Australia staffer Andrew Boak to be chief economist for its Australian and New Zealand business. 

Boak joined Goldman Sachs in 2007 after working for the RBA and NSW Treasury. 

He is expected to report to Andrew Tilton, Goldman Sachs' chief economist for Asia. 

Goldman Sachs announced the promotion internally on Wednesday. 

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It's getting to that time of year when fast money fund managers and trading desks go looking for reporting season surprises. 

Macquarie analysts weighed into the debate on Wednesday morning, running the numbers on the last reported franking credit balances of Australian stocks. 

Perennial table-toppers BHP and Rio Tinto were carrying the most franking credits as at their most recent financial year end on an absolute basis.

Macquarie noted that both companies make most of their earnings in Australia, however their dual-listings meant only a partial payout of franking credits. 

In terms of surprises, Macquarie analysts said Westpac Banking Corp had grown its franking balance strongly, while Newcrest Mining's had been in retreat since 2013. 

The analysts said Salmat had the highest franking balance as a proportion of its market capitalisation. 

Franking credits, which are created when company's pay tax in Australia and can pass that benefit on to Australian shareholders, are one factor that can spur a company to pursue capital management and return those credits to shareholders in the form of off-market buybacks or special dividends. 

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