CORRECTED-UPDATE 1-Australia's Spotless Group plans to raise up to $928 million in IPO

Sun Apr 27, 2014 10:44pm EDT

(Corrects price paid by PEP for Spotless in third graf)

* Spotless puts offer price at A$1.60-A$1.85 a share

* PEP to retain 49 percent of company

* Spotless eyes A$1.5 bln of new contract opportunities

SYDNEY, April 28 (Reuters) - Australian facilities management company Spotless Group plans to raise as much as A$1 billion ($928.15 million) in the country's biggest initial public offering so far this year.

Spotless is offering 540.5 million new and existing shares at A$1.60 to A$1.85 each, partly to repay debt, the company said on Monday.

The planned share sale comes less than two years after Australia's biggest private equity firm Pacific Equity Partners (PEP) acquired the group for A$730 million. PEP will retain 49 percent of the business after the IPO.

The sale will give Spotless a market value of A$1.76 billion to A$1.93 billion.

The quality of earnings and margins had improved under private management, Spotless Chairman Margaret Jackson said, as the company exited loss-making and marginal contracts to focus on higher margin contracts.

Jackson also said the catering, cleaning and laundry group was benefiting from a trend towards outsourcing in the industry as it continued a restructure started when PEP took control of the business in August 2012.

"The business has identified potential new contract opportunities representing approximately A$1.5 billion in annual revenue coming to market by the end of full year 2015, with further significant new opportunities in adjacent services and sectors," Jackson said in a statement.

Investment banks Citi, UBS and Deutsche were the joint lead managers for the IPO. The back-end bookbuild is scheduled to take place on May 20-21, which will set the price for the IPO.

The final price is due to be announced on May 22 with the listing scheduled for May 28.

The proposed IPO surpasses the A$450 million raised by Japara Healthcare Ltd earlier this month. ($1 = 1.0774 Australian Dollars) (Reporting By Jane Wardell; Editing by Ryan Woo)

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