Fliway Group seeks up to $44.5 million in first IPO of the year
Fliway Group, the independent transport and logistics provider, is seeking to raise between $27.3million and $44.5 million through the first initial public offering on the NZX this year.
The prospectus to be registered this afternoon is expected to value the company at around $70 million to $75 million.
The 18-year-old company is owned by Duncan Hawkesby, the son of former broadcaster John Hawkesby, and his wife Gretchen, who is the daughter of New Zealand's richest man, Graeme Hart. The pair will retain between 30 to 50 percent of the company following the IPO.
Hart provided seed capital for the pair to buy the business in 2006 which has since been repaid in full, Hawkesby said.
"He's a great guy to have around the dinner table and bounce things off," he said.
Hawkesby will remain managing director of the company which is forecast to make $85 million in revenue and $4.5 million in net profit after tax in the financial year ending December 2015.
The offer will be attractive to investors seeking yield income as the company will pay out between 50 and 70 percent of NPAT in dividends, amounting to a 7.8 per cent yield and a total $2.25 million to $3.15 million this financial year.
Hawkesby said the IPO will help raise the profile of Fliway and broaden its shareholder base, while giving the company access to capital in the future. The money raised will mainly go to the Hawkesbys, who are currently the sole shareholders, with $9.3 million left in as new capital. Of that, $6.5 million will be used to reduce the company's debt to $12.5 million post IPO.
Craig Stobo is chairman of the company while Alan Isaac has been appointed as independent director. The closing date for the offer will be April 1 and it's expected to trade on the NZX main board by April 9, with the first dividend due for payment in September this year.
The company's primary activities are transporting and warehousing freight throughout New Zealand and co-ordinating freight movements internationally, including customs clearance. It has 450 staff, 170 vehicles in its fleet, 11 branches and five warehouses around New Zealand.
Hawkesby said Fliway's point of difference was dealing with specialised freight that can be hard to handle in sectors such as consumer electronics, commercial refrigeration and computers. It also has a hub and spoke delivery model where it can add value on the so-called last mile of delivery. He used the example of delivering a commercial fridge to a dairy where Fliway would transport the cabinet and light box to the shop and then bolt the two together.
It also owns half of UPS-Fliway, a joint venture its had for the past 17 years with UPS, one of the world's largest package delivery companies.
Hawkesby said it was looking to expand courier deliveries and build or acquire into new sectors, such as dangerous goods, refrigerated transport or bulk liquid haulage.
Fliway has grown revenue 45 percent since Hawkesby took over as managing director in 2006.
It has generated strong free cash flow of $19 million in the past eight years after capital expenditure which has allowed it to fund growth internally while still investing in the business and repaying debt. Capital expenditure was beefed up to $14.6 million in the past two years as it upgraded some of its fleet and invested in more salespeople to drive growth, but future capex is forecast much lower at $2.4 million per annum.
In a recent report on the state of the local equity market, law firm Chapman Tripp suggested up to 20 companies could float this year, compared to the 16 listings on the main board and NZAX last year.