Finance float sails forward quietly

Allan Hubbard

Allan Hubbard's South Canterbury Finance is gearing up for a sharemarket float - a move that is likely to see the intensely private Timaru-based businessman pocket as much as $210 million.

South Canterbury, which has a loan book of around $1.02 billion, making it the third-largest finance company after UDC and Marac, is silent about the listing likely to occur in the lead up to Christmas.

However, in a short statement yesterday, it said Hubbard would sell up to 75 per cent of the company, which is worth as much as $280 million, according to an analysis of company earnings. Forsyth Barr would be the float's lead manager.

South Canterbury said: "Further details regarding the listing will be provided once the prospectus has been registered."

The float is an apparent about-face for the company. Hubbard told the Business Herald last month: "They [the media] are always talking about floating South Canterbury Finance.."

Hubbard, over 70 and chairman of the firm, is thought to be selling so he can ease back on his workload.

The company faces a tough road to market.

It will be vying for investors' attention in competition with Graeme Hart's transtasman food business Goodman Fielder, which is seeking about A$1.6 billion before Christmas.

It is floating at a time when higher interest rates and the high dollar are putting the brakes on the economy.

Finance companies have also been criticised for poor disclosure and for their exposure to sectors prone to the downturn such as consumer lending and property.

However, South Canterbury, established in 1926, is one of the stronger companies in the sector. It has a diversified loan book spread across a diverse range of sectors.

Its earnings have shown steady growth. In the year to June, net profits rose from $20.7 million to $26.5 million and sales rose from $106.7 million to $131.6 million. In the year to June 2003, net profits of $15.8 million were made on $89.1 million of sales.

One analyst said: "It's been around a long time. I rate them highly."

Hubbard said of the latest results: "Over the next 12 months, South Canterbury Finance looks forward to conservative growth through planned development and further diversification of its lending exposure across a broad range of industries."

South Canterbury is the holding company for several finance subsidiaries across the country, including Auckland Finance, Waikato Finance and Palmerston North Finance in the North Island and the Southland and Otago Finance in the South.

It also trades on Hubbard's reputation for parsimony and conservatism.

Although Hubbard is one of the South Island's wealthiest men, he lives a humble life, working from 6.30 in the morning until 10.30 at night and still drives a 37-year-old VW Beetle.

- additional reporting Andrea Fox