Bain Capital Rumoured to be Launching a A$2.8 billion IPO


March 30, 2015

The word on the street is suggesting that private equity firm Bain Capital is preparing to launch a nearly A$3 billion initial public offering (IPO) for its accounting software firm MYOB. The IPO could be launched as early as Tuesday and if the predictions were true, then it would be the largest float of the year.


The Australian Breaks the News
The Australian reported on the plans during the weekend. According to the report, the US-based private equity firm is planning for MYOB to make its stock market debut at the end of April, with the campaign being launched as early as this week.


The aim is to raise between A$700 million and A$800 million from institutional fund managers for the IPO. According to the Australian, MYOB’s float is handled by Citi, Macquarie, Bank of America Merrill Lynch, UBS and Goldman Sachs. Reunion Capital Partners is advising Bain Capital.


MYOB – an Expected Listing
The software company has been seen as an expected listing and institutional fund managers believe there are great rewards in the horizon. It is likely the company will meet its annual expectations. Its valuation will be done in line with Intuit, the US company, which has a market capitalisation of over A$27 billion.


According to Business Insider, Citi analyst Justin Diddams has estimated the company is worth between A$2.4 billion and A$2.8 billion. He also suggested the company’s revenue would grow 8%. This would be A$323 million in total, with EBITDA growing 17% to A$150.6 million this year. MYOB has been pushing aggressively into the cloud-based accounting software systems, which is aiding the company to grow faster. The company has increased its customer base, which has been alleged to be floated.


Bain acquired the company from another private equity firm, Archer Capital and several smaller co-investors, in 2011. Archer Capital profited A$1.1billion in the deal.


Australian Share Market on a Bullish Run
The Australian share markets have been experiencing a relatively bullish run in recent months. Yield-hungry investors are pushing up company valuations and this deal is a sign of capital markets picking up as well. Last week, Chevron completed Australia’s biggest ever block trade when it sold a 50% stake in Caltex, the petroleum marketer, for A$4.6 billion. The IPO of MYOB would be a great example of the market strength, as the expected valuations would provide the private equity firm over twice the amount it paid when it acquired the company.


Furthermore, technology valuations have been high at the start of the year. MYOB’s rival cloud-based accounting software company Xero has seen its shares up by 54% from their December prices. US investor group, Accel Partners, injected $100 million to Xero’s earlier this year. More importantly, the company is valued now at $3.2 billion, even though it hasn’t yet reported a profit and it is forecasted to create only $126.6 million in revenue.


It remains to be seen whether the private equity firm announces the IPO plans officially at the start of the week. In the meantime, you can find private equity deals at DealMarket.

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