Vocus Group, listed by the Australian Securities Exchange (ASX), has named financial advisors to conduct a listing of the fourth largest retail telco in New Zealand, Vocus NZ. The original public offering (IPO) on the New Zealand Stock Exchange (NZX) was scheduled to take place before the end of 2021, subject to prevailing market conditions.
"The board considers that a successful IPO of Vocus New Zealand will provide greater balance sheet flexibility to the Vocus Group allowing Vocus Network Services to invest in core long-term strategic fiber opportunities to extend its network reach, build on its product capabilities and cement its position as Australia’s specialist fiber and network solutions provider," Vocus Group said in its ASX Group.
It will also allow the board the opportunity to revisit its dividend strategy for the long term. Vocus said its NZ business, which includes brands such as Slingshot and Orcon, was led by an experienced and highly capable management team, a proven challenger, and was very strongly positioned in the New Zealand market.
Over the past five years, it has also generated steady revenue and pre-tax earnings (EBITDA) rise, the company said. "Along with the organic growth achieved over the years, Vocus New Zealand has also developed a core competency on the acquisition and integration of businesses that add both customer scale and capability to the existing operation," Vocus Group said.
In the year to the end of June, a good result from Vocus NZ helped to improve the group's overall results. Revenue from New Zealand rose by 5% to NZ$398.8 million, while earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 4%. Community sales, meanwhile, decreased year-on-year from A$1.89 billion to $1.78 billion. EBIT was also down, from $105.7 million in 2019 to an EBIT loss of $108.9 million, following the identification of a $202.1 million impairment.
For the NZX, which is facing a drought of substantially new products, the listing proposal is good news. As they seek money, NZ-based tech companies also tend to be preferring the ASX. Plexure, a mobile engagement company already listed on the NZX, is scheduled to begin trading on the ASX on 25 November as well.
Flintfox, a trading revenue management software provider based in Auckland earlier this month, said it was pondering a listing on the ASX. In 2018, SaaS accounting software provider and one-time NZX darling Xero left the New Zealand ASX exchange.
The board of the Vocus Group reported that it found that substantial organic growth and market consolidation opportunities were now open in all market segments, which would be better realized if Vocus New Zealand were an independent company. As joint lead managers of this process, Goldman Sachs, Jarden and Craigs were named.
