* Japara to raise up to A$450.4 mln in biggest IPO of the year so far
* Offers up to 225.2 shares at A$2.00 each, valuing company at A$525 mln
* Tests IPO appetite before Medibank’s A$4 bln IPO and after 3 aborted deals (Adds offer details, company comment, fund manager comment, IPO industry background)
SYDNEY, April 4 (Reuters) - Australia’s Japara Healthcare plans to raise over $400 million in an initial public offering (IPO) that could test investor appetite for the healthcare sector ahead of multi-billion dollar deals.
Japara, which runs 35 care centres for the aged, could be embarking on the country’s biggest IPO so far this year before the possible sale of shares in state-owned insurer Medibank Private and private hospital operator Healthscope.
The company’s announcement, however, comes at a time of uncertainty in Australia’s IPO market after three deals were recently aborted, ending a year of IPO fever when many shares were priced too high.
A five-year IPO drought finished in 2013 with a six-fold on-year increase in the value of share sales, while the stock index built on a 2012 recovery with a 15 percent rise. Yet the shares of several IPOs have languished below their sale prices.
Japara plans to raise as much as A$450.4 million ($415.79 million) by selling up to 225.2 million shares at an indicative price of A$2.00 each, giving the company a market capitalisation of A$525 million, showed its IPO prospectus released on Friday.
Macquarie Group was the lead manager of an IPO fully underwritten after attracting cornerstone investors, Japara said. The shares are due to start trading on April 17.
The company in the prospectus said it aims to increase its number of beds to 5,000 from 3,131 by buying facilities and through new developments.
“Australia’s population is ageing and the demand for services within the residential aged care sector continues to grow,” Chief Executive Andrew Sudholz said in a statement. “At Japara, we are well placed to meet this growing need.”
Australians aged 65 or over make up about 14 percent of the population, or 3.22 million people, and that figure is likely to reach 25 percent over the next 30 years, showed data from the Australian Bureau of Statistics.
Consideration of demographics alone could draw interest for Japara’s IPO, said Don Williams, chief investment officer at Platypus Asset Management.
“It’s a good business,” Williams said. “I think the interest will be reasonably strong because it’s a market that’s growing.”
Japara’s IPO could indicate appetite toward listings in general and healthcare listings in particular, before Medibank’s estimated A$4 billion flotation and possible sale of Healthscope by TPG Capital and The Carlyle Group (CG.O), which analysts put at A$5 billion.
The government announced the sale of Medibank about the same time No.2 hotelier Mantra Hotels pulled the plug on its A$400 million IPO after investors complained of high pricing. Similar fates befell retailer OzSale and Stirling Early Education.
“I think the pricing of IPOs seem to be a lot more difficult than it normally is,” Williams said. “There are still a lot of jittery investors out there basically.”
$1 = 1.0832 Australian Dollars Reporting by Byron Kaye and Maggie Lu Yueyang; Editing by Christopher Cushing