* Bis Industries seeks to raise up to $475 mln in IPO
* Fund managers warn mining services sector still
* Bis joins growing list of Australian IPOs
By Jackie Range
SYDNEY, Nov 7 KKR-owned mining services company
Bis Industries Ltd is planning to raise as much as A$500 million
($475 million) in an initial public offering before the
year-end, sources familiar with the matter said, capitalising on
a resurgence in Australia's IPO market.
Bis Industries will use the proceeds of the IPO to pay down
debt, and KKR & Co plans to keep 100 percent of its
stake in the business, one source said. A second source said Bis
is expected have a market capitalisation of around A$1 billion.
But a profit warning on Thursday by drilling services
specialist Ausdrill Ltd served as a sobering reminder
of the tough industry climate faced by Bis.
Ausdrill said its profit could fall as much as 60 percent
this financial year, blaming challenging market conditions. The
news sent its shares down 29 percent.
Mining services companies have been battered as Australia's
resources spending boom peaked amid a slowdown in demand from
top commodities consumer China. As miners from BHP Billiton Ltd
down shelved projects and slashed costs, services firms
bore the brunt with many cutting prices and others losing
"I think it's still going to be a pretty tough sector," said
one fund manager who asked not to be named, and who expects
companies will be continuing to look at opportunities to make
There has been a spate of profit warnings from mining and
resource contractors this year including Transfield Services Ltd
and WorleyParsons Ltd.
Still, the BIS Industries float comes amid a flurry of IPOs
in Australia, building up confidence in new listings following a
moribund period in the market.
Other listings expected by the end of the year include
broadcaster Nine Entertainment Co Pty Ltd , which is
hoping to raise A$658 million, and property investment manager
GDI Property Group, which is seeking to raise A$568 million.
On Thursday education training provider Vocation Limited
brought forward the bookbuild for its A$230.5 million to A$253.5
million raising, setting the price at the top end of the range,
a person familiar with the matter said.
"How the market prices Bis Industries is going to be: either
the investors understand the tough industry it is in, or whether
it's been carried away by a momentum that we are getting in the
current (IPO) market," another fund manager, who declined to be
named, told Reuters.
Bank of America Merrill Lynch, Goldman Sachs and UBS are the
joint lead managers on the Bis Industries initial public
offering, one person said. KKR, Bank of America Merrill Lynch,
and UBS could not be reached immediately for comment.
Representatives for Bis and Goldman Sachs declined to
The sources declined to be named because the process is