Tasmea Limited has accelerated its initial public offering (IPO), raising A$59 million with the transaction underwritten just last week.
Primarily operating in Western Australia and serving iron ore miners, the company’s shares were priced at A$1.56 each, targeting a market capitalisation of A$339.7 million and an enterprise valuation of A$363.8 million.
Finalised last Thursday, the IPO was quickly filled by institutional investors, bypassing the planned retail bookbuild - which was supposed to take place between March 27th to April 10th.
With the IPO in bay, the company is slated to list on the ASX on April 29, 2024.
Looking ahead, the proceeds from the IPO will be allocated to repaying selling shareholders, reducing debt, acquisitions, and working capital.
IPO Summary
Tasmea, with its major divisions in electrical, mechanical, water, and civil works, sold 17% of its stake in the IPO, committing to a 17-month escrow period.
Financial institutions Morgans, Shaw and Partners, and Unified Capital Partners led the deal, with Morgans and Unified providing underwriting.
The IPO proceeds are earmarked for various strategic uses, including shareholder payouts, debt reduction, acquisitions, and bolstering working capital, demonstrating Tasmea's prudent financial planning and growth-oriented strategy.
About A$26 million of IPO bookbuild will go towards paying out selling shareholders, with A$12 million marked for reducing leverage.
The leftover will fund acquisitions (A$10 million) and working capital (A$5 million).
The business would have A$24.1 million pro forma net debt at completion.
Finances
Financial projections are optimistic, with Tasmea aiming for a revenue of A$434 million and earnings before interest and taxes (EBIT) of A$54 million for the fiscal year ending June 30.
The company, founded by Stephen Young and employing 1,400 people, is projected to achieve A$434 million in revenue and A$54 million in earnings before interest and taxes (EBIT) for the current fiscal year.
Future forecasts are even more promising, with an anticipated EBIT of A$110 million by the 2027 financial year.
Background
Tasmea Limited is an investment company which operates sixteen wholly owned subsidiaries across the mining, resources, defence, water, energy and financial services space.
Previously known as E&A, the company has expanded its portfolio by acquiring several mining services and contracting subsidiaries throughout Australia.
The company initiated its expansion in 2001 by investing in the South Australian firm Louminco, which later merged with Whyalla Fabrications.
In 2009, Tasmea acquired ICE Engineering & Construction, further enlarging its operations.
The company extended its reach to Western Australia in 2016 with the acquisition of Tasman Power, leading to the establishment of Tasman Rope Access.
Additional acquisitions in Western Australia include Northwest Mining & Civil in the Pilbara region, Laptek Systems in Maddington, and A Noble & Son in Welshpool, specialising in lifting and rigging services.
Mostly recently, Tasmea has strengthened operations in NSW with the acquisition of Forefront services – a company specialising in underground and surface fixed plant maintenance.
Also, the company recently acquired Corfield’s Electrical Service, a privately-owned Central Queensland-based company that provides electrical and communication installation and maintenance services to the industrial and commercial business sectors.
Samso's Thoughts
Mining servicing is a business that will print money. There is no need to think about it much as the whole country is awashed with customers. There are competitors but looking at the balance sheet that is in the prospectus, one can feel comfort.
I have been in the mineral exploration and mining sector since 1992 and I can tell you that the mining servicing business and those services that help the mineral exploration sectors are always making money.
DYOR on this counter and you will find the same conclusion. There is a reason that the institutions are all over this IPO. They back good stories and good income-generating business.
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