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02 Nov 2009 09:46

Checking out again

By John Foley

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Context News

Myer, the Australian department store chain formerly owned by private equity firm TPG, began trading on the Sydney stock market on November 2. The shares, which were priced at A$4.10 against an indicative range of A$3.90-$4.90, fell 8.5%, to A$3.75. The Standard & Poor’s ASX 200 index closed down 2%.

The float price gave Myer an inaugural market capitalisation of A$2.4bn ($2.2bn), and an enterprise value of $2.8bn. Around A$400m of the equity would be new shares issued in order to pay down debt.

TPG bought Myer for A$1.4bn in March 2006, funding the purchase with A$979m of debt. The new owners sold Myer’s flagship Melbourne property in September 2006 for A$605m, and used the proceeds to fund a A$560m dividend for the shareholders. At the time of re-listing, the company carried A$392m of net debt – 1.2 times forecast ebitda for the year, according to the listing prospectus.

The US buyout firm has quadrupled its money floating Australian department store chain Myer for A$2.4bn. But the shares fell 9% on their debut, albeit in a weak market. Investors will hope Myer isn’t another let-down like Debenhams, the UK retailer TPG floated in 2006.

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