Dixon Hospitality shelves IPO plan

Pubs group Dixon Hospitality has suspended its plan to float on the share market and has now turned to private equity.

The group was looking at a valuation of $2.20 a share, built around 13.8-times forecast 2018 financial year profit and giving the company a market capitalisation of $186 million. 

Joint lead manager Morgans had sent out a pre-marketing research report valuing the company at $227 million.

And sponsor broker Evans & Partners has placed the company in a range of between 214 million to $245 million, including debt.

Metrics used by Evans & Partners include a 13.5-times price-to-earnings ratio, 9.2-times EBITDA and a 10.5 per cent weighted average cost of capital.

The company was expected to kick off the Asian leg of the IPO roadshow this week. 

However, the IPO plans have now been put on hold after the company was approached by a domestic private equity firm late last week.

That has led to discussions around a potential takeover.

At the same time, there’s been an approach from offshore which means now that two offers are on the table.

With Dixon holding 50 leasehold venues, primarily in Sydney, Melbourne and Brisbane, the company is looking for private equity to fund capital growth capital growth.

That would put the company in a position where it could go back to the ASX boards in a couple of years' time. 

Dixon’s board, led by chief executive (and former Spotless Group boss) Bruce Dixon, saw shareholders getting more value out of private equity tipping in funds rather than sharemarket float.

And Mr Dixon is no stranger to private equity with Pacific Equity Partners taking Spotless private in 2012, keeping Dixon for a rapid turnaround and then floating the company in May 2014.

The company will spend the next few weeks going over the details of what’s on offer.

by Leon Gettler, April 12^th 2017