26/09/2006 - 22:00

Nomad set to buy McGrath

26/09/2006 - 22:00

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Manufactured accommodation supplier Nomad Building Solutions is planning to use the proceeds from its $78 million public share offer to acquire Wangara company McGrath Homes and continue its growth in the Queensland and park homes markets.

Nomad set to buy McGrath

Manufactured accommodation supplier Nomad Building Solutions is planning to use the proceeds from its $78 million public share offer to acquire Wangara company McGrath Homes and continue its growth in the Queensland and park homes markets.

Nomad managing director Phil Guy believes the McGrath acquisition will complement the company’s existing business, which is focused primarily on servicing the resources sector.

McGrath builds transportable houses for the rural sector and smaller development projects and owns Norfolk Homes, which builds two-storey framed houses.

The Nomad business generated total revenue of $92 million in 2005-06 and its prospectus forecasts 58 per cent growth in the current financial year.

McGrath Homes generated $27 million in revenue last year and expects to achieve 26 per cent growth.

The combined business is roughly half the size of listed competitor Fleetwood Corporation, which had total revenue from continuing operations of $254 million last financial year.

However, Fleetwood has a very different business mix, with most of its revenue coming from its caravan division and only about one-third from manufactured accommodation.

Another big difference between the two companies is that Fleetwood has traditionally been a big supplier to the park home sector, through customers like National Lifestyle Villages, whereas Nomad has just started to penetrate that sector.

In the resources sector, where Nomad’s customers include Newmont, Rio Tinto and BHP Billiton, its main competitors are Ausco and Fleetwood.

Mr Guy anticipates plenty of growth in both the resources and park home sectors.

Nomad’s existing business, which trades as Nomad Modular Building, will continue to focus on manufactured accommodation for the resources sector while McGrath Homes, which will continue to be run by chief executive Wayne McGrath, will target park homes and transportable homes.

“We will focus on the logistical, project management side of the operation and Wayne will do what he does best, and that is build a quality product,” Mr Guy said.

He added that the group planned to lift the level of the park home offering by servicing that market through McGrath, which has traditionally had a higher quality focus.

Nomad’s public float comes one year after a management buy-out, led by Mr Guy and his management team.

“When the MBO was put together, it was always on the premise that we would list,” he said.

Most of the float proceeds will be used to buy-out ANZ Capital and US investor DB Zwirn, which funded the MBO. However ANZ will retain a 7.1 per cent shareholding.

The float proceeds will also be used to partially fund the acquisition of McGrath Homes, at a total cost of $17.5 million.

Mr McGrath said he decided to merge the family business with Nomad because of the growth potential of the combined group, using McGrath’s brand and Nomad’s infrastructure and project management skills.

The IPO has been underwritten by Wilson HTM and Euroz Securities.

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