After a long tech-list drought, the NZX now has two possible IPOs looming as Vocus NZ (whose stable includes Orcon, Slingshot and Sky Broadband) and 2degrees manoeuvre toward possible listings.
Vocus NZ parent Vocus Group - whose shares have been suspended since June 25 - will formally delist from the ASX today as the final step in its $A3.5 billion sale after current shareholders were paid out yesterday.
The final stages of the deal also saw the Australasian telco's entire board tender their resignation yesterday, as expected, including Auckland-based executive director Mark Callander.
The departures from the board room won't affect management roles. Callander, for example, continues to serve as chief executive of the company's New Zealand operation, and the head of its wholesale business on both sides of the Tasman.
And after resigning as managing director, Kevin Russell continues his group chief executive role.
Callander and Russell were the two board members set to lose share options tied to long-term bonus plans when the deal closed, according to a scheme booklet filed with the ASX during May.
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As compensation, if continuity of service conditions were met, Russell would receive A$23.4 million and Callander A$8.4m (the pair were not involved in a vote by the rest of the board, which allow them a say in whether the deal should go ahead, noting the value of their "deep industry knowledge." The sale was also subject to a shareholder vote following an independent report by Deloitte, court approval, and NZ OIO approval).
New owners Macquarie Infrastructure and Real Assets (Mira, part of ASX-listed Macquarie Group) and superannuation fund Aware Super formed a consortium called Voyage Australia for the acquisition.
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Advertise with NZME.So far, Voyager has far made four appointments to what will become the new Vocus Group board: three from Macquarie (Ani Satchcroft, Mark Hector and Patrick McCawe) and one from Aware Super (Maria Donnelly). It says others will follow.
On July 1, a Macquarie insider confirmed to the Herald that Forsyth Barr, Goldman Sachs and UBS have been hired to manage the potential float or trade-sale of Vocus' New Zealand arm.
In November last year, Vocus Group hired Goldman Sachs, Jarden and Craigs Investment Partners to kick the tyres for a possible NZX listing of Vocus Group's NZ assets (which, beyond the 226,000 customers using its various retail ISP brands, include a nationwide fibre network, a data centre operation, and retail power company Switch Utilities).
But in February, the IPO effort - which was said to be targeting a valuation around the $720m mark - was suspended after the board received the Mira/Super Aware trade-sale offer, which represented a 25 per cent premium on Vocus Group's market cap at the time.
An again-off-again process has seen talk of a Vocus NZ IPO since 2017, when US private equity funds KKR and Affinity Partners kicked the tyres on Vocus Group. Later that year, Vocus Group put its NZ arm on the block, with Trustpower and 2degrees (flanked by an un-named private equity player) said to be the two short-listed buyers before new management pulled the deal off the table in early 2018.
Vocus NZ by the numbers
Vocus NZ's recent forays have included buying the 20,000-customer Stuff Fibre, partnering with Sky TV and Chorus on the new Sky Broadband service, and being the first telco (through its Orcon brand) to offer Chorus' new Hyperfibre 8 product.
The 2020 Stuff Fibre acquisition bumped Vocus' NZ subscriber base up 10 per cent to around 226,000 (putting Vocus well ahead of 2degrees and Trustpower in fixed-line broadband, if still some distance being Vodafone NZ on around 420,000 and Spark on around 700,000).
For its 2020 financial year, Vocus Group reported that revenue for its New Zealand operation rose 6 per cent to NZ$398.8m for the year to June 30, while ebitda rose 4 per cent to NZ$65.4m.
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Advertise with NZME.It was the NZ operation's fifth straight year of operating earnings growth, helping to explain the apparent expectation of its IPO at a A$700m market cap - a substantially higher valuation than the reported A$500m price tag when Vocus tried to sell its NZ business in 2018 (it was ultimately withdrawn from sale).
Voyage Australia has been approached for comment. Vocus NZ had no comment on the potential listing.
2degrees' runs non-deal road show
Meanwhile, documents leaked from a recently wrapped up non-deal roadshow for 2degrees' possible IPO indicate fund managers were told the Kiwi telco would be valued at around A$1.5b ($1.6b).
The roadshow - which took the virtual form of 32 Zoom calls - was part of an effort by Jarden, Macquarie and Craigs Investment Partners to sell fund managers on the merits of 2degrees, which owns its own mobile network but is relatively weak in broadband (a contrast to Vocus, which is strong in broadband and owns its own nationwide fibre network, but is a minnow in mobile through a wholesale deal with Spark).
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2degrees' is majority-owned by Seattle-based, Toronto-listed Trilogy International Partners, which earlier flagged it is lining up a possible public listing of its NZ asset, and a possible trade sale of its second asset, under-performing Bolivian telco NeuvaTel (trading as Viva).
While 2degrees recently reported its fifth year of operating profit, the Central American Viva has struggled badly amid a chaotic, pandemic-hit economy and Trilogy carries a US$630m debt load. The upshot is that Trilogy has a market cap of just C$112m ($128m).
While the NZX could potentially land both Vocus NZ and 2degrees, dual or ASX-only listings are also possible (at this point, both parties are keeping their options open in the build-up to their respective possible IPOs).
And the local bourse will also be wary that a trade-sale could also take either off the table, just as Vodafone NZ's IPO was headed off at the last minute in 2019 as the business was bought by Infratil and Brookfield.
