Summerset seeks up to $136m from IPO

Retirement village operator Summerset will seek up to $136 million from an initial public offer of 30% of the shares held by Quadrant Private Equity plus new equity.

After a slight delay due to a Companies Office malfunction, Summerset has today registered a combined investment statement and prospectus detailing plans to raise between $122.5 million to $136 million based on an indicative price range of $1.40 to $1.60-a-share.

Based on the indicative price range the company would have a market capitalisation in the range of $301 million to $336 million on listing on the NZSX.

In a statement, Summerset said the final terms of the offer, including price and number of shares are expected to be announced on October 7, following a bookbuild to institutional investors and NZX firms.

The offer is expected to open on October 10 with an NZX listing scheduled for November 1.

Summerset said the offer will comprise a partial selldown by existing shareholders and a primary raising of $50 million of new capital to be used for growth opportunities with a target of 250 new units per annum within five years.

Funds controlled by Quadrant Private Equity currently hold approximately 97% of the equity of Summerset, and intend to sell 30% of their current shareholding resulting in a retained majority shareholding.

Craigs Investment Partners and Deutsche Bank AG, New Zealand branch, together with First NZ Capital, are joint bookrunners, joint lead managers and joint organising participants to the IPO. Forsyth Barr is also a joint lead manager.

Summerset chairman Rob Campbell said market feedback indicates keen interest in the IPO.

“Summerset is a quality business with very favourable underlying demand drivers and, as a result, good growth prospects. This is positive for the local capital market.”

He noted that the population of people aged 75 plus is expected to nearly double in the next 20 years, many of whom are likely to be seeking retirement village living options.

Summerset’s ability to provide independent living through to aged care is particularly attractive to residents, Mr Campbell says.

Summerset is forecasting pro forma net operating cashflows of $51.9 million and total investment properties of $632.6 million for the financial year ending 31 December 2012.

The company is the country’s third largest retirement village operator with 13 operational villages across the country providing services to 1700 residents.

Quadrant bought its 97% stake from AMP Capital in two tranches in 2008 and 2009.

Senior management, including chief executive Norah Barlow, hold the remaining 3%.

NBR understands Summerset representatives had to stand in line at the Companies Office's physical address to submit the documents after several government websites crashed and were offline for two and a half days this week.