Citi in mix for Dixons Hospitality
Investment bank Citi is being tipped as the frontrunner to secure a joint lead manager role on the float of pub group Dixons Hospitality as the company prepares to float this year. It comes amid attempts by Moelis to buy last year’s pub float prospect Redcape, with the deal yet to be finalised.
Michael Dixon, the son of Spotless chief executive Bruce Dixon, heads the Dixon Hospitality business, which is based in Melbourne. It is in expansion mode and hopes to float in the coming months; it has Evans and Partners as a joint lead manager.
Among its recent acquisitions has been the Open Door Pub Company, which owns 18 venues, mostly in Victoria, and was purchased by the company in September.
The Dixon business may have been among the companies that knocked on the door of pub group Redcape before Moelis made moves on the company, which placed its IPO on the back burner.
A $650 million-odd deal between Moelis and its backers and Redcape, though, is still to be reached. Apparently, Redcape had a raft of trade buyers make advances towards the company it the months before its planned float and during the build up to the IPO, which never actually eventuated. JPMorgan was working on the IPO deal along with UBS before it was shelved for an alternative trade sale.
It’s interesting to note that one of the groups that approached Redcape to buy the business more than 12 months ago was The Australian Pub Fund, controlled by veteran banker Mark Carnegie, advertising entrepreneur John Singleton and former Qantas boss Geoff Dixon.
That business was at one stage also set for a listing, but the owners have opted to retain the operation at a time that prices for pubs remain bullish, which makes a float that values the portfolio at a lower price than it would be worth on the direct market hard to justify. Pubs are currently selling at lofty capitalisation rates of about 5 to 6 per cent, a sharp turnaround from the global financial crisis when some debt ridden hotels were selling at less than half of their value at the earlier peak of the market.
Meanwhile, an advisory role for Citi would be yet another coup for the investment bank that was on two largest IPOs of 2015 — the listings of the superannuation fund manager, the Link Group and accounting software provider MYOB.
Source: The Australian, Bridget Carter, Gretchen Friedmann, 11th January 2016
