Engineering company Calibre Group has commenced marketing a $75 million initial public offering, the largest of the year, at a price that reflects the downturn in the stockmarket over the past quarter.
The IPO puts a $478 million valuation on Calibre, which was established in Perth ten years ago.
The IPO is pitched at eight times forecast 2013 net profit, which puts it in line with the broader mining services sector.
Gresham’s Mining Services Quarterly has calculated the top 50 stocks in the sector are currently trading at a median price-earnings multiple of 7.9 times forecast FY13 profits.
Three months ago, the sector’s median PE multiple was a much healthier 11.2 times.
Calibre is being marketed by joint lead managers Goldman Sachs and UBS as being similar to white collar engineering groups such as WorleyParsons, Lycopodium and Ausenco.
The largest of these is Worley, which is trading at 13.8 times FY13 times.
As a white-collar EPCM contractor, Calibre is being promoted as having a less capital intensive business model and lower risk than many other mining services companies.
Its planned IPO will test the durability of the investment market, as it follows a very weak period for new capital raisings.
It also follows the failed Barminco IPO, which was pulled last year after the vendors were unable to achieve the pricing they wanted for the specialist mining contractor.
Calibre’s current shareholders will retain their stock, but will be diluted by the new share issue.
Most notably, private equity fund First Reserve Corporation will see its stake diluted from 70 per cent to 60.9 per cent.
The IPO will be through a new entity, Calibre Group, which is effectively a holding company for four operating businesses – Perth-based Calibre Global and Safety & Rescue Australia, along with Brisbane-based Xstract Mining Consultants and Brown Consulting.
The core business, Calibre Global, is a major contractor in the Pilbara, working on iron ore expansion projects.
The group has diversified through four major acquisitions, lifting staffing to 2,000 and turnover to more than $500 million.
It has also bolstered its board of directors with the recent appointment of former Smorgon Steel managing director Ray Horsburgh as chairman and former National Mutual boss Geoff Tomlinson as a director.
Calibre founder Ray Munro, who is a major shareholder and until recently was chairman, will continue as a non-executive director.