Australian plumbing supplies business Reliance Worldwide will float on the Australian stock exchange on Friday with strong investor backing after the company’s share price was fixed at the top of the indicated price range.
In what is set to be the largest initial public offering in Australia this year, shares in the business are expected to list at the top of their $2.27 to $2.50 pricing range.
That will raise more than $900 million for the company and its owners, the Melbourne-based Munz family.
The family, which has owned Reliance for 30 years and transformed it into a global business, will retain at least 30 per cent of shares after the float.
Ausbil chief executive Paul Xiradis said the upper-end listing price indicated investors around the world were excited by Reliance’s business prospects.
He said the Munz family’s continued investment in the business was also a good sign.
“We do like the business, we think it’s well managed and we think there’s good prospectivity in future growth as well,” Mr Xiradis said.
“I think the key point is that the family still has a significant interest in the business. They’re there for the long term, so they recognise the value of the business.”
Morgans Brisbane client adviser Bill Chatterton, whose firm acted as co-lead managers on the float, also expected the market to look favourably on the Munz family’s continued involvement.
He said Reliance, which sells valves, thermostatic products and its signature “SharkBite” push-to-connect pipe fitting, was an Australian manufacturing success story.
“I think it has had, in the hands of the Munz family, a history of growth and innovation,” Mr Chatterton said.
“I expect the market is looking at that and saying, there’s no reason why that shouldn’t continue.”
Pro forma figures in the prospectus show the company generated net sales of $451.7 million in 2014-15, projected to increase to $534.9 million in 2015-16 and $587.8 million in 2016-17.
Mr Xiradis said he believed Reliance was more than capable of meeting these targets and expanding market share in Australia and its key North American market, which makes up almost 70 per cent of net sales.
“I think their product itself is a good product. It is gaining market share and acceptance both domestically and in the United States,” Mr Xiradis said.
However, some portfolio managers expressed concern the expected $2.50 share price was excessive and didn’t provide enough room for future share price growth.
Investors Mutual portfolio manager Simon Conn said investors had to question how much more growth Reliance could achieve in the North American market.
“It’s looking expensive, to be honest,” Mr Conn said.
“It’s priced pretty fully … but it does have a good track record.”
Another portfolio manager said the company looked strong but needed more upside valuation at this point in the investment cycle.
The final listing price will be officially revealed on Thursday evening AEST.