To top things off, Bain has loaded MYOB with $435 million of debt. Operating earnings are about seven times the expected interest expense for 2015 so it's not an immediate worry. But there's enough to pose a refinancing risk should credit markets seize up, as they did in 2009, or the company's earnings deteriorate.
How much are investors being asked to pay to wear these risks? A lot.
MYOB's offer price is expected to be $3 to $4 a share. Even at the low end, MYOB is priced at 20 times its 2014 operating earnings and a PER of 27.
Two rounds of private equity ownership, growing competition, loads of debt and a premium price tell you all you need know about this float. AVOID.
http://www.theage.com.au/business/i...uld-avoid-the-myob-float-20150420-1mp1zc.html
OR MAYBE ...
On the demand side, at around $2.3 billion MYOB is bordering on being the 100th biggest company in the market. With Bain Capital holding 57 per cent, it won't be fully weighted for index purposes, but it'll be an ASX 200 company at least. That puts it firmly in the sights of active and passive institutional funds, which will almost certainly not get what they want initially. So short-term, the demand looks good and the supply looks tight, whatever the price.
http://www.theage.com.au/business/c...ld-pay-off-in-myob-float-20150417-1mn41x.html
How much are investors being asked to pay to wear these risks? A lot.
MYOB's offer price is expected to be $3 to $4 a share. Even at the low end, MYOB is priced at 20 times its 2014 operating earnings and a PER of 27.
Two rounds of private equity ownership, growing competition, loads of debt and a premium price tell you all you need know about this float. AVOID.
http://www.theage.com.au/business/i...uld-avoid-the-myob-float-20150420-1mp1zc.html
OR MAYBE ...
On the demand side, at around $2.3 billion MYOB is bordering on being the 100th biggest company in the market. With Bain Capital holding 57 per cent, it won't be fully weighted for index purposes, but it'll be an ASX 200 company at least. That puts it firmly in the sights of active and passive institutional funds, which will almost certainly not get what they want initially. So short-term, the demand looks good and the supply looks tight, whatever the price.
http://www.theage.com.au/business/c...ld-pay-off-in-myob-float-20150417-1mn41x.html