Arvida raises $75m in IPO

Dan Carter and Richie McCaw own shares in Park Lane Retirement Village. Photo / Getty Images

Retirement village roll-up Arvida Group has confirmed the final pricing for its initial public offering at 95c per share, which will give the company a market value of around $214 million when it makes its NZX debut on December 18.

The Auckland-based company said it had garnered strong demand from Australasian institutions and New Zealand brokers during yesterday's bookbuild, which set the final price near the top end of the 85c to $1 indicative range in the prospectus.

The full $75 million sought through the IPO had been raised, the company said.

Arvida said a $5 million priority pool for existing investors in the 17 villages involved in the Arvida merger, as well as residents and staff, opens on November 27, when a broker firm offer to retail investors will also kick off.

All Blacks including Dan Carter, Richie McCaw and Kieran Reid own shares in one of the facilities involved in the merger, Christchurch's Park Lane Retirement Village.

The proceeds of the IPO will be primarily used to pay down debt, with the company expected to have net debt of around $7.8 million following the IPO.

Chairman Peter Wilson said the 95c final price struck "a balance between the interests of existing shareholders and the company's future as an NZX main board listed entity".

"Arvida has identified an opportunity for growth and further consolidation in the sector, to meet the demands of New Zealand's ageing population for a continuum of care in facilities that meet their expectations," Wilson said.

Chief executive Bill McDonald said the immediate focus now was to complete the integration of the 17 foundation villages involved in the merger, while also establishing a support centre for the existing village management teams who will remain in place.

"For our 1800 residents it will be life as usual as Arvida's approximately 1000 staff continue to deliver high quality care and services across all our facilities in the North and South Islands. Our goal is for Arvida to become a natural choice for those seeking excellence in the provision of retirement village living with an emphasis on aged care," McDonald said.

Existing shareholders -- including owners of the 17 villages, board members and senior management -- will hold roughly 60 per cent of Arvida's shares following the IPO. Existing investors are subject to sale restrictions on their shares until May 2016.

Arvida is forecasting a net profit of $10.6 million for its first full-year of operation in the 12 months to March 31, 2016, according to its prospectus.

The company intends to pay quarterly dividends amounting to 60 per cent to 80 per cent of underlying profit, with a gross dividend yield of 5.9 per cent expected in the 2016 financial year.

Wilson has said the company could begin acquiring additional retirement villages around six months after its listing.

Arvida is also aiming to grow through expanding existing facilities and developing new ones.

The company has a $40 million debt facility with its bank, which is likely to be drawn upon to fund growth.

Ten of Arvida's 17 villages are located in Canterbury, with the remaining facilities in Nelson, Blenheim, Waikanae, Palmerston North, New Plymouth and the Bay of Plenty.

It will have 952 aged care beds and 812 retirement units.

Eighty per cent of Arvida's portfolio provides care services through care beds and serviced apartments.

The IPO is being managed by Forsyth Barr.