WASHINGTON: Quadrant Private Equity’s water tap manufacturer Zip Industries could list as a company worth at least $600 million, based on the earnings estimates being offered to prospective investors this week. Zip and its investment banking advisers, which include UBS, Macquarie and Citi are meeting with Australian investors this week after testing appetite for a float of the operation in Hong Kong and London as part of its non-deal roadshow.
Apparently, prospective investors were told that Zip generated $180 million in revenue during 2016 and is growing at about 9 per cent annually on average, with its earnings margins at about 20 per cent. The thinking is that based on Zip’s impressive track record, the group could secure about $45 million in earnings before interest, tax, depreciation and amortisation next year. While the company is subject to a dual track process, it is thought that the most likely outcome for the business is that it will be listed on the Australian Securities Exchange.
Adviser Gresham had been working on a possible sale of the business earlier this year, with trade buyers said to be told to bid over US$500m for the operation. However, it is now understood that the three joint lead managers and Gresham are confident that the company could be valued at more than US$600m through an initial public offering, with the pricing expected to fall at about 14 times its earnings.
Zip Industries, based in Sydney, was founded by Michael Crouch and makes and markets Australian-designed and Australian made instant boiling water systems sold in more than 70 countries. They are specified for use in kitchens, hospitals, universities, schools, public buildings and homes. The latest float plans come after private equity firms and trade buyers, including A.O Smith, Bosch, DeLonghi and Miele, earlier lined up to buy the operation. Pentair was also said to be circling the business, advised by investment bank Deutsche.
