Christopher Adams

The Business Herald’s markets and banking reporter.

Metro raises a glass to investors

Chief speaks of ‘debt of gratitude’ to backers after glassmaker has a solid debut on the stock exchange.

Sir John Goulter (right) - pictured yesterday with Nigel Rigby - says the value-added glass processing market is forecast to grow. Photo / Richard Robinson
Sir John Goulter (right) - pictured yesterday with Nigel Rigby - says the value-added glass processing market is forecast to grow. Photo / Richard Robinson

Metro Performance Glass chief executive Nigel Rigby was full of praise for the company's private equity shareholders yesterday after the glass supplier made a solid debut on the stock exchange.

The Auckland-based company's initial public offering (IPO) process was carried out amid criticism from some quarters of the investment community about listings of private equity-owned companies.

Floats by such investment firms are often viewed with scepticism because the private equity business model is based on buying low and selling high.

A consortium of companies, led by Sydney-based Crescent Capital, took control of the glass company for a sale price of $181.5 million in January 2012 after it got into financial trouble.

Rigby, the former boss of building products supplier James Hardie's United States division, took Metro's helm after the ownership change and said the consortium had pumped $40 million of capital into the business to get the firm back on its feet.

He said it took a special group of investors to buy into Metro at "rock bottom" of the building cycle.

"We've got a real debt of gratitude to the Crescent-led programme," he said. "Private equity often gets a pretty tough rap but these guys have been excellent shareholders."

The Metro offer raised a total of $244.2 million, of which about $230 million will be used to buy the glass maker's assets from the selling shareholders, including Crescent Capital, who will retain in total an 18.5 per cent stake in the company following the IPO.

Metro forged on with its listing process despite private equity-owned equipment rental firm Hirepool ditching its plans to list last month after institutional investors baulked at pricing sought for the offer.

Rigby said it had been a "rocky road" getting the glass supplier listed.

"We were one day into the deal roadshow when Hirepool was withdrawn - we were right in the critical steps," he said.

Metro received resistance from investors on its pricing and the final price for the offer, which was more than two times oversubscribed, came in at $1.70, near the bottom end of a $1.65 to $1.90 indicative range.

Shares closed up 3.5 per cent at $1.76 last night, giving Metro a market capitalisation of $326.5 million.

It was the second-biggest New Zealand listing this year after Genesis Energy in April.

Metro also has a secondary listing on Australia's ASX.

With the listing completed, Rigby said a major focus for the company was completing construction of its $21 million production facility in South Auckland, which it is planning to commission by March next year.

Metro, which processes more than two million square metres of glass annually and has a 50 per cent share of the New Zealand market, has more than 17 sites across the country, including five major processing facilities, and more than 700 staff.

The company stands to benefit from rising construction activity, buoyed by the Christchurch rebuild.

"The New Zealand value-added glass processing market is forecast to grow, driven in particular by the expansion of the residential construction market and the improving commercial construction market," Metro chairman Sir John Goulter said this month.

Building consents rose at their fastest pace in the three months in June, lifting by a seasonally adjusted 3.5 per cent compared with May, according to Statistics NZ figures released yesterday.

Metro expects net profit of $14.3 million in the year to March 31, 2015, up from $12 million in the same period a year earlier. Full-year sales are forecast to rise to $171.9 million in 2015 from $155.4 million this year. Metro expects to pay a dividend of 3.6c a share in the 2015 year, implying a cash yield of 2.1 per cent.

The offer was managed by Forsyth Barr, Macquarie Securities and UBS.

- NZ Herald

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