Sponsor brokers value Viva Energy at up to $6.2b for IPO

Oil refiner and fuel retailer Viva Energy’s run at that ASX-boards is formally underway.

Its sponsor brokers released detailed pre-marketing reports to fund managers on Wednesday explaining the business, its industry and seeking to value the company.

Bank of America Merrill Lynch analysts valued the company at 7 to 8.2-times forecast 2018 EBITDA, or $4.3 billion to $5.1 billion on an enterprise value basis.  The bank’s numbers were based on the year to December 31, 2018.

Fellow lead manager Deutsche Bank has given Viva an equity valuation range of between $4.8 billion and $5.4 billion.

Its valuation range is equivalent to an equity to net profit multiple of 13.1 times to 14.6 times.

UBS was the highest of the three lead managers, with a $4.89 billion to $6.2 billion valuation, or 13 to 16.9-times forecast 2019 financial year profit.

Both Deutsche Bank and UBS told clients to focus on forecasts for the year to June 30 2019, which did not include the impact from a one-off refinery shut down earlier this year.

If successful, Viva is expected to be the biggest IPO since Medibank Private raised $5.7 billion for its sharemarket debut in November 2014.

Viva is expected to seek to raise $2.5 billion to $3 billion for a listing in July.

The company owns an oil refinery at Geelong in Victoria, fuel import terminals across the country and about 1000 Shell branded service stations.

In a note to fund managers titled A well-oiled machine, Deutsche said since the acquisition from Shell, Viva has made significant capital investments and embarked on various growth initiatives across each business segment, which should provide future growth opportunities for investors. These include expanding the retail network, growing fuel margin, expanding non-fuel margin, extending commercial sales and improving refinery throughput and reliability.

Deutsche expects capex requirements to moderate from 2018.

Extracted from AFR

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