ComfortDelGro ditches IPO plans for Australian unit
TRANSPORT OPERATOR ComfortDelGro C52 is no longer pursuing an initial public offering (IPO) for its wholly-owned Australian subsidiary ComfortDelGro Corporation Australia on the Australian Stock Exchange.
In a filing on Wednesday (Nov 10) after market close, the company said that IPO conditions in Australia have become more challenging since August, when the group announced that it was considering listing ComfortDelGro Australia.
The company added that "other strategic options" have emerged; it did not elaborate.
The boards of directors of both ComfortDelGro and ComfortDelGro Australia, with the advice of joint lead managers Credit Suisse (Australia) and UBS Australia, have thus mutually agreed not to further pursue the IPO at this time, after taking into account the "market conditions as well as current strategic priorities".
Earlier in August, when ComfortDelGro first sounded this IPO plan, the group said this move would unlock the value of its land-transport business assets in Australia. Back then, Australia was also the group's single largest overseas investment destination, with a total investment of S$1.17 billion.
ComfortDelGro Australia operates a total fleet of over 4,400 vehicles across Australia, making it one of the largest privately owned bus operators there.
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CGS-CIMB analysts estimated then that the listing could boost the price of ComfortDelGro's Singapore-listed stock to between S$1.83 and S$2.15. The analysts added that Australia was the best-performing overseas location for the group during the Covid-19 pandemic in 2020.
To be sure, Australia was a growing market for ComfortDelGro and the company's financial statements reflected this. Australia contributed 13.2 per cent of the group's revenue and 14.6 per cent of its operating profit in 2018. In the first half of FY2021, Australia contributed 20.3 per cent of its revenue and 28.2 per cent of its operating profit.
Analysts had been positive on the IPO as they saw the potential for a special dividend for shareholders, as well as a re-rating of ComfortDelGro's shares.
As far as the withdrawal of the IPO goes, ComfortDelGro said there will be no material impact on the operations of the group and ComfortDelGro Australia. The withdrawal is also not expected to have a material impact on the net tangible assets and earnings per share of the company and the group for the fiscal year ending December.
Lim Jit Poh, chairman of ComfortDelGro, said: "We had initially planned to list ComfortDelGro Australia by the end of the year, subject to prevailing market conditions. The environment has changed somewhat since then, so we are not proceeding with our IPO plans at this time.
"The intent is still to enhance the value of our Australian assets, and we will carefully evaluate all strategic alternatives."
ComfortDelGro said it will continue to focus on growing the business through mergers and acquisitions, contract renewals and new contract tenders.
Shares of ComfortDelGro closed on Wednesday at S$1.61, down 0.6 per cent or S$0.01.
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