IPO hopeful Nido herds cornerstones; pricing talks under way

afr.com:

Nido, the childcare business led by former Think Childcare boss Mathew Edwards, has its brokers rounding up cornerstone commitments for its initial public offering ahead of a wider book-build expected to kick off in coming weeks.

Prospective backers were told Nido would spend the bulk of the proceeds on the acquisition of new centres. Peter Braig

Fund manager sources said Nido would look to raise $100 million for a market capitalisation of about $250 million at listing. Its brokers, Canaccord Genuity, MA Financial and Wilsons have been meeting investors who could potentially anchor the listing since last week.

Street Talk understands early pricing expectations were for the company to be valued at nine times EBITDA or 13 to 14 times the price-to-earnings ratio. While that sounds aggressive, sources said there was good demand at those price level, thanks in part to Edwards’ track record.

Nido hasn’t set a date for a broader book-build yet. However, investors expect the childcare business to press play in the coming weeks to try to front-run future rate hikes that could hit its properties’ cap rates and squeeze the valuation.

Edwards, Nido’s chief executive, has been in the childcare game since 2001 and is best known for delivering his investors a solid exit at Think Childcare. The company listed at $1 a share in 2014 and was taken private seven years later by KKR’s Busy Bees for $3.20 apiece – a 3.2-times return not counting the dividends.

Nido has built a portfolio of 52 centres from Vaucluse to Campbelltown. A typical centre charges $149 average daily fees and runs at about an 80 per cent-plus utilisation rate, printing 20 per cent EBITDA margins. Across all the centres, that’s expected to add up to about $29 million in