Carlyle-Backed Coates Hire IPO to Raise Up to A$700 Million -Sources

By Gillian Tan

SYDNEY--Private equity firm Carlyle Group (CG) and Australia's Seven Group Holdings (SVW.AU) are seeking to raise up to A$700 million through an initial public offering of equipment-hire group Coates Hire, two people familiar with the matter said Thursday.

Carlyle and Seven--who each own around 46% of the company-- won't sell down their existing stakes, but are considering the equity markets to raise between 500 million Australian dollars (US$515 million) and A$700 million, one of the people said.

A Carlyle spokeswoman declined to comment and a Seven spokesman was immediately unavailable.

J.P.Morgan, Macquarie Group, Deutsche Bank and Bank of America Merrill Lynch have been appointed joint lead managers, while Commonwealth Bank of Australia will play a co-lead manager role, focusing on retail distribution, the people said.

The IPO may occur as soon as the fourth quarter of 2012, but owing to the recent refinancing of A$1.85 billion in Coates Hire debt, there is no urgency for Seven and Carlyle to rush to market.

The Wall Street Journal revealed Coates Hires' debt--originally due to expire in July 2013 and January 2014--has been extended to July 2015 thanks to commitments from banks in the existing syndicate, including Westpac Banking Group and Sumitomo Mitsui Financial Group Inc., and new commitments from the likes of Barclays and HSBC.

If Coates Hire joins the Australian Securities Exchange, it'll be the largest private-equity backed IPO since a TPG-led consortium sold 100% of its stake in department-store operator Myer Holdings (MYR.AU) for A$2.2 billion in late 2009. Shares in Myer have never traded above their offer price of A$4.10 a share.

The most recent private equity-backed ASX IPO was in August 2011, when Australia's Pacific Equity Partners raised A$202 million by listing KFC-franchisee Collins Foods Ltd. (CKF.AU). The stock has never traded above its offer price of A$2.50 a share.

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