The Redcape Hotel Group has lodged a Product Disclosure Statement (PDS) with the Australian Securities and Investments Commission (ASIC) for its Initial Public Offering (IPO) and listing on the Australian Securities Exchange (ASX) on 30 November 2018.
The Redcape portfolio comprises 32 hotels, 31 freehold and one leasehold, across New South Wales and Queensland and the group employs over 700 staff across its venues. In addition the group also owns and operates a number of bottle shops and a brewery.
Redcape Chief Executive Officer Dan Brady said: “At Redcape we take a ‘people first’ approach to our vision of shaping and nurturing sociable and sustainable communities and providing opportunities for growth and empowerment.
“Redcape’s strong business fundamentals are underpinned by a highly scalable management and operating platform. These are the result of an experienced and consistent management team, excellent corporate platforms and systems, and a highly trained and engaged workforce.
“Our scalable management and operating platform enable our local venues to benefit from the expertise of a management team with a collective industry experience of 115 years as well as technology investments that provide cost efficiencies and growth opportunities across the portfolio.
“Our growth strategy is underpinned by our core operations, as well as opportunities through refurbishment capital expenditure, portfolio recycling and alternative uses for our real estate land bank.
“The listing will diversify Redcape’s register which currently has 1,150 investors enjoying an 8% yield and quarterly distributions and, importantly, will provide a liquid market for the trading of Redcape’s securities. Being listed on the ASX will also provide Redcape with enhanced access to capital markets to assist with capital management and provide additional flexibility in respect of the funding of future growth initiatives.”
Redcape says that it will raise between $50m and $60m based on an offer price of $1.13 per stapled security and that pre-launch commitments mean the offer is fully subscribed.
Redcape will offer investors a defensive investment proposition with forecast distributable earnings yield of 7.8 – 8 per cent and distributable earnings growth of 3.5 – 5.8 per cent, per annum.
The proceeds of the offer will be used to fund the acquisition of three freehold assets and facilitate a sell-down of up to $60m of pre-offer stapled securities held by Moelis Australia Securityholders. Moelis Australia Securityholders will retain at least 204.2 million securities or 37 per cent of Redcape’s securities on completion of the offer.
Redcape, which is operated and managed by Moelis Australia Hotel Management Pty Ltd, will list with a market capitalisation of $623.2 million at the offer price.
The Redcape offer is due to open on 12 November 2018 and close on 22 November 2018. Redcape will commence trading on a conditional and deferred settlement basis on 30 November 2018.
Moelis Australia and Ord Minnett are Joint Lead Managers for the Offer.