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Metroglass forecasts strong profits at IPO launch

Metro Performance Glass is forecasting a substantial lift in revenue and profit over the next 15 months, according to a prospectus supporting a $244.2 million initial public offer.

The New Zealand glass maker - formerly Metro GlassTech - launched its IPO this afternoon, after an institutional and broker firm book-build priced the offer at $1.70 per share, as reported by NBR ONLINE on Friday.

The shares were priced at the lower end of the indicative price range of $1.65 to $1.90, as predicted by market sources.

However, according to Metroglass the offer was more than two times oversubscribed.

A total of 143.7 million shares will be offered, raising $244.2 million, most of which will go to its current private equity owners. The offer values the company at $314.6 million.

Metroglass' prospectus, released today, shows the company is forecasting pro-forma net profit of $14.3 million for the 12 months ended March 31, 2015, up from $12 million in 2014, with annual revenue climbing from $155.4 million to $171.9 million.

From the 2012 to 2014 financial year, Metroglass’ pro forma revenue and pro forma EBITDA increased at a compound annual growth rate of 11% and 45% respectively.

The company is predicting to make a net profit of $21.2 million in the 12 months ending September 2015..

Metroglass produces more than two million square metres of glass per year and pitches itself as the largest value-added glass processor in NZ with more than half of the market share.

The company says dwelling consents increased by 18% in the nine months to April – there are currently 22,695 consented new dwellings – which support its future growth. Glass demand tends to lag up to a year behind consents.

The Christchurch rebuild, Auckland housing initiatives and a high level of net migration all support glass demand.

There are 143.7 million shares on offer to raise $244.2 million, and New Zealand and international institutional investors have been allocated shares.

New Zealand resident clients of NZX firms, Australian resident clients of Australian brokers and certain Metroglass employees will be offered shares, although there is no public pool.

Selling shareholders will keep hold of 34.3 million (18.5% of total) shares after the offer is completed, and senior management will hold on to 7.1 million (3.8% of total shares and 75% of their current investment).

Metroglass chairman Sir John Goulter and CEO Nigel Rigby – former US head of building material group James Hardie’s US$900m business – are currently fronting a media conference. 

More by Calida Smylie

Comments and questions
6

I wish all potential investors the best of luck with this IPO, based on my recent experience with this company I can not see that they will achieve what they set out in the above article. They are still a poorly run company, they have no idea about customer care or proper management.
The company is run by their installers as opposed to being run from the top down.

And you bought how much glass off Metro? They didn't get to supply more than 50% of all flat glass in NZ by being poor operators.

I detect an employee or a fully committed investor.
I would argue that based on their previous financial reports and write-offs they can only be poor operators. I personally would prefer to supply 10% of all flat glass in NZ with a positive margin. How much money have they lost over the last couple of years?

I'm with you Michael. We have spent plenty with this Company. We recently needed a bit of labour only work done and they inadvertently cced the following internal email.

"need to find a way to wriggle out of this as we don’t want to do it – were not here to sell labour alone – especially when we are busy"
Gareth Xx
Contracts Manager
Obviously we aren't a good customer. Guess we won't be a good investor as well. Besides, private equity firms don't seem to be helluva good IPO offerors in my limited experience.

Yes the PE backed IPO's of Ryman, Kathmandu, and Summerset were all terrible flops.

...the last time the business got sold (for about the same price) it went bankrupt. The CEO of Fletcher Building at the time said it would end in tears.

Well it is being sold again, for the same price. Anyone who buys shares in this is tempting fate (let alone silly instos). You are tempting rationality.

How many "told you so's" do you need ?