Plumbing Manufacturer Reliance Worldwide to List on ASX in $1.3bn Deal
Reliance Worldwide designs, manufactures and supplies water flow and control products such as fittings, pipe or thermostatic products as well as Hot Water Systems.
Reliance Worldwide Corporation targets to list on the ASX on 29 April in a $1.3bn deal run by joint lead managers Macquarie and JPMorgan. Reliance Worldwide is a multinational company focused on plumbing products and solutions.
In the US home improvement is projected to grow at single digit rates, while residential construction as well as existing home sales may further contribute to this growth. While most analysts believe that in Australia residential construction will slow down following a cyclical peak, commercial construction is projected to remain robust and provide a platform for somewhat stable growth.
Reliance Worldwide designs, manufactures and supplies water flow and control products such as fittings, pipe or thermostatic products as well as Hot Water Systems. The company has operations in the USA, Australia, the UK, Canada and New Zealand. Almost 90% of its net sales are generated from fittings, pipes and valves with the majority of those sales in its key markets USA and Australia.
Reliance has achieved average sales growth of 13% per annum for the past 10 years and the company has a strong market position in key markets, characterised by trademarks, long-term customer relationships and a ‘first mover’ advantage.
The final offer price will be determined via bookbuild and is expected to be in the range of $2.27-$2.50. Reliance seeks to raise up to $918.8m with the net proceeds being paid to the owners of the company, Jayburn and GSA International, in an attempt to consolidate ownership and restructure the business under a single parent entity. It is worth noting that the owner companies are essentially controlled by Chairman Jonathan Munz, who will retain control of around 40% post listing.
Principal hurdles include customer concentration and valuation risks. While the offer price assumes further growth is sustained, the outlook appears balanced as management has a strong track record in the industry and aims to reward shareholders with dividend distributions.
Company: Reliance Worldwide Corp
ASX Code: RWC
Shares on Offer: 315 - 367.5m
Listing Price: $2.27-$2.50
Market Capitalisation: $1.2-$1.3bn
Listing Date: Apr 29
This publication appeared first on The Australian.
Author: Simon Herrmann
Apr 26, 2016
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.