RPT-UPDATE 1-KKR-backed Australian mining services company pulls IPO

Wed Nov 27, 2013 3:35pm EST

* Bis Industries had sought to raise around $450 mln

* No timeframe for reviving float

* IPO hit after rivals' shares sank on profit warnings

By Sonali Paul

MELBOURNE, Nov 27 (Reuters) - Mining services firm Bis Industries Ltd, owned by KKR & Co, has called off a planned A$500 million ($456 million) IPO, underscoring the grim prospects for Australia's resource sector in an otherwise buoyant market for stock offerings.

The decision by KKR comes after investors hammered the shares of mining and energy services firms following several profit warnings over the past few weeks due to the poor outlook for new projects and exploration spending as demand for resources moderates.

In contrast, Australian companies have so far this year raised $2.4 billion through initial public offerings (IPOs), more than double the volume for all of 2012, according to Thomson Reuters data.

"The feedback I have had from investors is that, whilst they acknowledge that Bis Industries is a high quality business with a strong and attractive market position, the current negative sentiment around resources expenditure is impacting on all companies exposed to the sector," Bis Industries Chief Executive Ian Lynass said in a statement.

Australia's biggest mining and energy services firm Worley Parsons lost more than a quarter of its market value last week after it slashed its profit outlook.

Ausdrill Ltd has slumped nearly 40 percent following a profit warning earlier in the month, and smaller rivals Forge Group and Ausenco have both flagged balance sheet problems, which have resulted in suspension of trading in their shares.

Bis Industries is different from most of the companies that have slashed their profit outlooks as these firms are mostly involved in exploration drilling or construction of new mines and energy projects. It, however, remains vulnerable to the volatility in the sector.

"We recognise investor sentiment is not currently conducive to an IPO and therefore have elected to not proceed at this time," Bis CEO Lynass said.

KKR has owned Bis Industries since 2006. The company was created from the business units that were left over from Brambles Industrial Services, which KKR bought from Brambles Ltd in June of that same year.

KKR had intended to hold on to its entire stake in the IPO and remains committed to the business, a spokesman said.

Listings in Australia and New Zealand were expected to rise five-fold this year to $8.9 billion from 2012 in the busiest year for new offerings since the global financial crisis.

In a positive sign, jobs portal Freelancer Ltd soared up to 400 percent on its debut on nearly two weeks ago.

Others expected to list before the end of the year include Australian packaging group Pact Group, consumer electronics retailer Dick Smith Holdings Ltd, and education training provider Vocation Ltd.

Bank of America Merrill Lynch, Goldman Sachs and UBS AG were the joint lead managers on the Bis Industries IPO.

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