Company Overview: Mayfield Childcare was incorporated in March 2015 in Melbourne, Australia. The company owns and manages childcare centres in Victoria and in the suburbs of Pakenham, Diamond Creek, South Morang, Bendigo, Macedon, Sydenham, Hoppers Crossing, Bayswater, Lilydale and a few more. The company provides education and cares for children falling in the age group from six weeks to six years. With female workforce on the rise in Australia, the company is looking to leverage on the increasing demand for quality education coupled with childcare. Mayfield was formed by former Fosters Brewing Group and Utilicorp United Inc.’s executive, Peter Lowe; and former Tabcorp Holdings’ executive, Dean Clarke.
Initial Public Offer: To fund its growth plans, Mayfield now plans to raise $24 million (under replacement prospectus with revised offer) through an initial public offering which is open from November 15 to November 18,2016. Under the initial offer, the company planned to raise $35 million for 26 centres. According to the replacement prospectus, the company is looking to sell 24 million new shares at an issue price of $1 each. The market capitalisation of the company post-listing is expected to be around $30 million. Further, the pricing is then said to be based on a price-to-earnings ratio of 8.5 times forecast net profit after tax for CY17. According to Peter Lowe, Chairman of Mayfield Childcare, the design of the company will be to augment growth as Mayfield is in the process of improving the already existing childcare centres in addition to acquiring new ones.
Prospects: The childcare industry in Australia has seen a decent growth per annum over the last five years. On listing, Mayfield Childcare is expected to own about 16 existing day childcare centres located in Melbourne, Victoria, representing 1,360 licensed places for children, which is expected to be in line with industry requirement. The issue price looks competitive compared to peers already listed (such as “Think Childcare,” who are quoting much higher on the ASX).
Considerations: Mayfield is said to have 1360 licensed places upon listing which is a big drop from the originally proposed number of 1941. Further, one of the 16 centres in the portfolio has witnessed loss impacting the earnings before interest and tax for the 12 months to June 2016. It is also to be noted that the sector, in general, does not witness great trading volumes for companies known to be playing in the field for quite some time. Further, government regulations and funding activities play a key role from growth perspective.
If the IPO is successful, shares of Mayfield Childcare Limited (Proposed ASX code: MFD) would commence trading on the Australian Securities Exchange (ASX) around November 28, 2016. The IPO is managed by Ord Minnett and Taylor Collison.
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