Australian Securities Exchange (ASX)-listed Vocus Group has appointed financial advisers to execute a listing of New Zealand's fourth largest retail telco, Vocus NZ.
The initial public offering (IPO) was expected to be undertaken before the end of 2021 on the New Zealand Stock Exchange (NZX), 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 fibre opportunities to extend its network reach, build on its product capabilities and cement its position as Australia’s specialist fibre and network solutions provider," Vocus Group said in its ASX announcement.
It would also provide the board with the ability to review its long-term dividend policy.
Vocus said its NZ business, which includes brands such as Slingshot an Orcon, was led by an experienced and highly capable management team, was an established challenger and was very strongly positioned within the New Zealand market.
It had also delivered consistent revenue and pre-tax earnings (EBITDA) growth over the past five years, 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.
A strong result from Vocus NZ in the year to the end of June helped bolster the group's overall performance.
New Zealand revenue rose five per cent to NZ$398.8 million, while earnings before interest, tax, depreciation and amortisation (EBITDA) rose 4 per cent.
Meanwhile, group revenue declined year-on-year from A$1.89 billion to $1.78 billion. EBIT was also down, after recognition of a $202.1 million impairment, from $105.7 million in 2019 to an EBIT loss of $108.9 million.
The listing plan is good news for the NZX which is experiencing a drought in significant new offerings. NZ-based tech companies also appear to be favouring the ASX as they seek capital.
Mobile engagement company Plexure, already listed on the NZX, is expected to start trading on the ASX as well on 25 November.
Earlier this month, Auckland-based trade revenue management software vendor Flintfox said it was pondering a listing on the ASX.
SaaS accounting software vendor and one-time NZX darling Xero left the New Zealand exchange for the ASX in 2018.
The Vocus Group board said it considered that there were now significant opportunities for organic growth and market consolidation across all market segments that would be better realised if Vocus New Zealand was an independent entity.
Goldman Sachs, Jarden and Craigs have been appointed as joint lead managers of this process.