ComfortDelGro calls off plans to float Aussie unit
SINGAPORE – Home-grown transport giant ComfortDelGro Corp has called off plans to float its Australian unit, citing unfavourable conditions.
The group said on Wednesday (Nov 10) that initial public offering (IPO) conditions in Australia “have become more challenging and other strategic options have presented themselves” since it announced in August that it was listing its wholly-owned subsidiary, ComfortDelGro Corp Australia, on the Australian Stock Exchange.
“In light of these developments, and on advice of the joint lead managers, Credit Suisse (Australia) Ltd and UBS Australia, the group has decided to halt its IPO plans,” the multi-modal transport operator said.
ComfortDelGro chairman Lim Jit Poh said: “The intent is still to enhance the value of our Australian assets and we will carefully evaluate all strategic alternatives.”
ComfortDelGro, which currently operates in six states and territories in Australia – New South Wales, Victoria, Western Australia, Canberra, Northern Territory and Queensland – with a fleet of more than 4,400 vehicles, said it will continue to focus on growing the business through mergers and acquisitions, contract renewals and new contract tenders.
In May, the group said it was looking to free up cash from its Australian business through an IPO or partial sale of assets.
Since then, ComfortDelGro’s share price has been trending downwards. It closed one cent lower at $1.61 on Wednesday.
Analysts had largely been optimistic about the float. UOB Kay Hian’s Llelleythan Tan valued the float at around A$1.5 billion (S$1.5 billion), which he said would add 8 per cent to 9 per cent upside to his target price of $1.90 for ComfortDelGro.
DBS Group Research said the Aussie listing could boost ComfortDelGro’s target price to around $2.20 “in theory”. It said cash released from the float could strengthen the group’s balance sheet for future mergers and acquisitions, and possibly for higher dividend payouts.
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