SYDNEY May 29 The A$500 million ($460.93
million) IPO of Australia's No. 2 hotel operator will proceed
after investors who rebuffed it two months ago changed their
minds in light of strong performances from other floats, a
source close to the deal said on Thursday.
The Mantra Group flotation not only gives its owners, Hong
Kong private equity firm CVC Asia Pacific Ltd and UBS AG
, an exit from an asset they have wanted to sell for
years - it is also the strongest marker of the change in IPO
sentiment since their March attempt to float the company failed.
Mantra, which does not own properties but manages 130 hotels
in the Peppers, BreakFree and Mantra chains around Australia,
New Zealand and Indonesia, was bought by CVC in 2008. It then
handed 40 percent to UBS, which financed the acquisition, in a
debt for equity swap.
CVC failed to divest Mantra in 2012, when media reports
suggested it could fetch more than A$600 million.
In March, CVC and UBS were forced to pull a public
sharemarket offer of just over half of Mantra when investors
refused to pay their target price of A$1.80 per share.
Following floats of cleaning and catering company Spotless
Group Ltd and Genworth Mortgage Insurance Australia Ltd
in the past week, with both still trading above their
issue prices, investors contacted the Mantra vendors saying they
would pay A$1.80 after all, said the source who was not
authorised to comment publicly.
CVC and UBS sold 53 percent of the company for about A$265
million in a front-end bookbuild this week and will keep the
rest. The vendors will lodge a prospectus on Friday with the
listing scheduled for June 20, the source said.
Mantra, UBS and CVC were not immediately available for
The vendors have pitched Mantra as positioned to capitalise
on a two-pronged influx of Australian tourism as the weaker
currency lures Asian holidaymakers and Australians who might
previously have considered traveling overseas.
Revenue at Mantra was flat at A$431 million in 2013 compared
with A$429 million in 2011. Mantra said in January its earnings
before interest, taxation, depreciation and amortisation this
financial year would exceed last year's A$63 million.
($1 = 1.0848 Australian Dollars)
(Editing by Stephen Coates)