May 21, 2014 / 5:56 AM / 4 years ago

UPDATE 1-Australia's PEP to raise $880 mln in Spotless IPO - source

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SYDNEY, May 21 (Reuters) - Australian private equity giant Pacific Equity Partners will raise A$954 million ($884.12 million) selling shares of cleaning and catering company Spotless Group Ltd in the country’s biggest IPO in almost four years, a source close to the deal told Reuters.

Bankers for PEP closed a bookbuild an hour earlier than planned on Wednesday after investors subscribed for “multiple times” the number of shares on offer as PEP sells a 50.6 percent stake of the company, said the source, who was not authorised to comment publicly on the deal.

Including the 49.4 percent stake PEP has said it will keep, the float will value Melbourne-based Spotless at A$1.9 billion if its shares hold their issue price when they start trading on Friday.

PEP took Spotless private for A$723 million in August 2012 and says it will triple earnings by 2015 by stripping costs and selling underperforming divisions.

Australia’s IPO market is continuing to heat up as it trades around record levels following five years of erratic performance. A day before the Spotless bookbuild, shares in mortgage insurer Genworth Australia rose 14 percent on their first day of trading in a A$583 million listing.

Shares of aged care provider Japara Health, the next biggest Australian float after Genworth having raised A$525 million, have traded consistently above their issue price since listing on April 17.

Not including the A$1.5 billion raised by Spotless and Genworth, IPO issuance in Australia since the beginning of the year has more than doubled to $1.2 billion over the same period in 2013, according to Thomson Reuters data. Companies raised $6 billion from new listings in 2013, the best year since 2010.

Bankers will issue Spotless shares for A$1.60 each, at the bottom of a A$1.60-A$1.80 range indicated in its prospectus, but will sell 596 million shares, the maximum number available, because of the high demand, the source said.

The float will be closely watched by private equity behemoths TPG and Carlyle which are expected to decide in June whether to sell Australian healthcare provider Healthscope in a public listing or via private sale, valued at an estimated A$4 billion.

The Australian government will also be watching following its announcement in March it will sell state-owned health insurer Medibank Private in a listing expected to fetch A$4 billion.

$1 = 1.0790 Australian dollars Reporting By Byron Kaye; Editing by Matt Driskill

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