The Australian Financial Review
November 26th, 2018
There is nothing like the lure of a lucrative future mandate to get money out of investment banks.
So it is interesting to hear privately-owned mining equipment company National Plant & Equipment is offering a lead role on a mooted sharemarket listing to get a new acquisition funding package out of an investment bank.
Street Talk understands National Plant’s adviser, PwC, has sent a request for proposal to a handful of local investment banking teams asking for best price and terms on a new $110 million loan.
Proceeds are to be used to bolt-on a smaller rival – sources pointed to Wolff Group – and help fund the purchase of some new equipment, with the funding required by the end of the year.
Sources said the RFP was sent in the past fortnight and banks were working on their responses.
While acquisition funding is something that may normally be too small or too risky for the big investment banks – particularly those without a lot of balance sheet to deploy in Australian mining services deals – the RFP is said to be getting more than its fair share of attention.
Because PwC – on National Plant’s behalf – has included a big carrot.
The rental company has its eyes on a sharemarket listing next year and whichever bank helps with the funding package is all but guaranteed a role on the float, should market conditions settle and the initial public offering window open.
So it’s a long-dated one for investment banks. But given the state of the IPO pipeline – which is skinnier this year than the previous five years – it’s a decent carrot to put in front of hungry capital markets teams.
Should National Plant come to market as planned, it is expected to be worth circa $1 billion on an enterprise value basis, and would likely be pitched as a bet on the commodities cycle and compared to Emeco Holdings.
It is understood such a loan is not National Plant’s only option. It is believed to also be talking to asset financiers, to see whether they could offer more affordable debt than the major investment banks.
The company, which is backed by Hong Kong and Singapore-based alternatives manager OCP Asia, has been seeking to make the most of the commodities cycle upswing in the past 12 months with a handful of bolt-on deals.
National Plant was picked up out of administration in July 2016, when it secured funding from OCP Asia. OCP is understood to have about $180 million invested in the company.