05/10/2020 - 15:38

Duratec joins WA IPO surge

05/10/2020 - 15:38

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Wangara-based contractor Duratec has launched Western Australia’s largest initial public offering this year, adding to a flurry of WA companies aiming to list on the ASX.

Recent IPO activity has been led by junior explorers. Photo: Gabriel Oliveira

Wangara-based contractor Duratec has launched Western Australia’s largest initial public offering this year, adding to a flurry of WA companies aiming to list on the ASX.

The pick-up in IPO activity has been led by junior explorers, mainly in the red-hot gold sector (see more below).

Duratec is a notable exception, after lodging a prospectus late last week with ASIC to raise $52.9 million through its IPO.

Another exception is Osborne Park-based DC Two, which is looking to raise up to $5.5 million to support the growth of its IT services and data centre business.

A third non-mining business reportedly considering an IPO is Belmont-based contractor GenusPlus Group, which specialises in the power and communications sectors.

GenusPlus raised $15 million through a private capital raising early this year, led by Sternship Advisers.

It has appointed Sternship’s sister company Ashanti Capital and national broking firm Bell Potter Securities to advise on a possible IPO early next year, according to a newspaper report today.

Duratec’s IPO provides an opportunity for its major shareholders to cash in some of their holdings.

Of the total proceeds, $24 million will be from the issue of new shares while $28.9 million will be a sell-down by existing shareholders.

Most notably, diversified contractor Ertech will cut its holding from 50.7 per cent to 19.9 per cent.

Managing director Phil Harcourt, executive director Chris Oates and operations manager Deane Diprose, who jointly founded the company 10 years ago, are also selling down their holdings.

Duratec’s prospectus showed the company has achieved strong growth over the past three years.

Its revenue increased to $247 million in the year to June 2020 while its net profit rose to $12.2 million.

The company is heavily exposed to the Department of Defence, which accounted for 54 per cent of FY20 revenue.

Looking ahead, the company said it had an order book of $145 million as at 31 July 2020.

Duratec specialises in the protection and remediation of a range of assets, notably steel and concrete structures.

Specific services include cladding replacement on high-rise buildings and treatment of bridges and dams.

The business has 675 personnel spread across 15 offices around Australia.

Euroz Securities is lead manager and underwriter to the share offer, with EY acting as corporate adviser and K&L Gates legal adviser.

The company will have a market capitalisation of $118 million at the issue price of 50 cents per share.

The uptick in IPO activity in WA comes after a very quiet six months, according to Business News’ Data & Insights.

The BN database shows that 10 WA companies have listed on the ASX this year, with nearly all those deals completed in the March quarter.

The only WA IPO to have completed since then was DUG Technology, which raised $34.8 million.

There will be a flurry of new listings by junior explorers this month.

Subiaco-based Siren Gold, which is focused on the Reefton gold project in New Zealand, is scheduled to start trading on Wednesday after raising $10 million.

Copper explorer Coda Minerals, a spin-out from Gindalbie Metals, is finalising its listing plans.

Chairman Keith Jones said the demand for Coda scrip far exceeded expectations, with the company increasing the maximum subscription to $8.5 million after receiving over $12.5 million in bids within 24 hours.

Similarly, gold-focused Miramar Resources is aiming to list on the ASX later this month after reaching its maximum raising of $8 million after just 24 hours.

Other WA-based junior exploration companies seeking to complete their IPOs include Pathfinder Resources (formerly Winmar Resources) and Megado Gold.

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