A WEBSITE aiming to be Australia’s largest and foremost platform for finding trade services, hipages.com.au, has secured new investment of $6 million from leading venture capitalists and business investors. 

Right Click Capital drove the capital raising, with blue chip institutional investors including Ellerston Capital, Australian Ethical Investment and KTM Capital taking the majority of the book.

The capital raising saw strong demand across the board, according to the boutique technology-focused advisory firm Right Click Capital. and brought new investors on to the register including Ellerston Capital, Australian Ethical Investment and KTM Capital. Representatives from Ellerston and Right Click Capital are joining the hipages Group board.

The combined investment will propel hipages.com.au to its professed goal of becoming ‘the dominant platform for finding tradies in Australia’.

“After 10 years of hard work growing the business this $6 million vote of confidence from some of Australia’s most respected investment funds is validation that we have solved a real problem for consumers,” said hipages Group co-founder and CEO David Vitek.

“Consumers post job requirements with us every 64 seconds and for each one we take them through the process of finding the best tradie for the job among our 40,000 suppliers.”

Hipages.com.au attracts just over one million visitors each month and its network of over 40,000 tradies are connecting with 500,000 consumer members. It has won awards such as BRW’s Best Places to Work and Most Innovative Companies for several years in succession.

Co-founder and COO Robert Sharon-Zipser said, “Our aim is to be a household name across the 8.3 million homes in Australia. We have been growing revenue at an average of 30 percent per annum and this round of funding will allow us to accelerate our growth.”

Right Click Capital partner Ari Klinger said hipages.com.au was taking the Yellow Pages concept into the 21^st century with great early success.

“Hipages is an outstanding company that has reinvented the Yellow Pages into a trusted service network that solves one of the perennial issues for consumers – finding a good tradie,” Mr Klinger said.

“The significant demand for the deal including from some of Australia’s premier institutional investors is a strong validation of the management team, strategy and investment potential of the business.”

Hipages.com.au connects consumers with tradesmen across 1,100 categories. It claims to have a growth rate of 1,000 users a day and place 30,000 jobs every month.

Hipages claims to ensure the quality of services by vetting every tradie on the site. Hipages.com.au continually collects customer feedback “to ensure the service offers only reliable and efficient tradies”.

Hipages was named in the Deloitte Technology Fast 50 Australia from 2008-2010 and the BRW Fast Starters in 2007-2009. 

www.hipages.com.au

POSTED MAY 12, 2014.

COMMERCIAL real estate and property companies are failing to meet even modest sustainability benchmarks, according to new research by progressive policy network Catalyst Australia.

The top performers in environmental, social and corporate governance (ESG) were found to be Stockland, GPT Group, Dexus Property Group and Mirvac Group, but even they rated modestly on the index, the top two reaching just 13 of a possible 24 points.

Beyond these leaders, the overall sustainability performance of the sector was found to be poor, according to Catalyst Australia, especially when compared with large companies in other Australian industries.

Catalyst Australia examined the 19 property sector companies listed on the ASX 200, which have a combined market capitalisation of $97.5 billion, rating their reporting standards and outcomes in the areas of environmental performance, gender equality, labour standards, supply chains, sustainability engagement and community investment.

Catalyst Australia executive director Jo-anne Schofield said the report, Building sustainability: A review of company performance in the commercial real estate and property sector, found a clear distinction between the various companies, with four clear leaders in the sector and others lagging far behind.

“The leaders, Stockland, GPT Group, Dexus Property Group and Mirvac Group, scored comparatively well against most indicators across the range of different topics and appear to have integrated environmental and social issues into their business performance and evaluation,” Ms Schofield said.

“However, even among this group there was room for improvement – with two reaching a score of 13 of a possible 24 in the index. Unfortunately, the stronger attention to environmental, social and corporate governance (ESG) by this group was dwarfed by the poor performance of the sector overall.

“The analysis by Catalyst Australia found that while larger players tend to lead on sustainability in other sectors of the economy, this wasn’t the case in the property sector, with the largest companies — Westfield Group and Westfield Retail Trust — performing well under-par. With a market capitalisation of $33.3 billion, making up 34.2 percent of the market capitalisation of the sector, these poor results impacted significantly on the performance of the sector as a whole.”

The report summarised the key areas in which most commercial property companies were falling down.

Environmental reporting very patchy: The report recommended the introduction of a standardised environmental reporting framework which includes disclosures about absolute as well per square metre averages for carbon emission, energy consumption, water usage and waste production.

Serious blind-spot in reporting by subsidiaries: Many subsidiaries simply relied on disclosures by parent companies, despite subsidiaries being ASX listed companies in their own right. Catalyst Australia recommended that the reporting lines between parent and subsidiary companies should be clarified.

Greater scrutiny needed by investors: Given the growing wealth of the sector and its interest to investors, the report argues that investors should consider mandating minimum reporting guidelines. In the interim, benchmarking against mature reporters within the sector and in other sectors should occur.

Greater transparency needed on labour and supply chain issues: Reporting about labour standards and supply chains was largely overlooked by all companies. Given the heavy reliance on external contractors across all stages of property construction, maintenance and servicing, Catalyst Australia recommended these areas be considered essential.

Worker health and safety ratings are an area of potential risk: More than two thirds of the companies provided minimal or no information on worker health and safety. Only two companies rated strongly in this area: Stockland and Mirvac. The lack of attention to worker health and safety disclosures is in stark contrast to reporting in other sectors of the economy. The poor result in the property sector underlines the need for a much more pro-active and transparent approach and clearer guidance, made more urgent by an expanded duty of care under national legislation introduced progressively from 2011.

Engagement with community and stakeholders: The importance of the built environment and its footprint on where people work, live and shop warrants much greater attention to reporting about community initiatives and measures to consult and engage stakeholders such as workers, unions, tenants and community groups.

Gender equality: The sector reported and performed relatively well on gender equality, with the proportion of women on company boards above the ASX 200 average. Unfortunately Catalyst Australia found this did not translate to a critical mass of women in management positions or greater attention to diversity and equal remuneration policies. Six companies have introduced numerical targets to increase the number of female employees.

The rating scale that underpins the research was developed by Catalyst Australia in 2012/13, based on authoritative information and academic research. It captures benchmarks and policies set by governments, intergovernmental organisations, non-government organisations, regulatory agencies and industry groups.

The approach Catalyst Australia took was to review public disclosures to raise awareness about the importance of transparency by companies about their social and environmental activities and impact. The report noted there may be instances where companies have policies in place, but if they are not publicly disclosed, they would not be captured.

A visual representation of the results is available on the Catalyst Australia CSR Dashboard: csr.catalyst.org.au

http://www.catalyst.org.au/

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CORPORATE financial advisory specialists InterFinancial can trace sparks of recovery and a lift in merger and acquisition deals in select pockets of Australia’s private company landsape.

Handshakes on deals are steadily replacing shaky deals in some industry sectors, InterFinancial market research reveals.

InterFinancial managing director Sharon Doyle said the company’s latest ‘dashboard’ research, which tracks four sectors – Engineering and Mining Services, Food and Agribusiness, Information and Communication Technology, and Health and Medical – revealed a rise in earnings multiples on offer for both the agribusiness and health sectors, although the mining sector stepped down from recent highs in line with general expectations.

There was plenty of activity, but earnings multiples in the Engineering and Mining Services sector broke the recent trend by falling to a four-month low, according to InterFinancial research. Ms Doyle said at the end of November, the sector traded on a forward price-earnings (PE) ratio of 9.7x, compared with the ASX200 on 15.9x.

This is revealed in deals such as that of Schramm, in association with GenNx360 Capital Partners, acquiring Air Drill Hammers and Bits in addition to Air Drill. Air Drill Hammers and Bits is a manufacturer of drill hammers and percussion bits used in reverse circulation mineral exploration and mining applications.

In other activity in the sector, VDM has divested the majority of its consulting businesses via a series of management buyouts. The remaining consulting business will be wound down as VDM concentrates on rebuilding for its future, InterFinancial was told.

WesTrac China, a wholly owned subsidiary of Seven Group, and Caterpillar Global Mining announced late last year that the companies had  year debt facility.

Global Energy Group (GEG) has announced the acquisition of Cunningham Construction, a resource management provider throughout the Australasia mining sector, to further strengthen its portfolio in Western Australia. The acquisition is aimed at facilitating entry into the mining market, a key growth market of GEG and builds a strategic portfolio of specialist services for the Australia and Asia Pacific region.

Other interesting corporate moves in the Engineering and Mining sector were logged by InterFinancial in the closing stages of 2013.

Emeco Holdingsyear operating earnings before interest, taxes, depreciation, and amortization (EBITDA) to be between $90m and $105m, weighted towards the second half.

WorleyParsons announced a reduction in 2014 net profit to $300m at best, InterFinancial reported, commenting, “This was despite the company only a month earlier stating that the result was likely to be an improvement on the 2013 figure of $322m.”

Programmed Maintenance Services increased net profit by 0.7 percent to $12.4m in the six months ended September 30. The group’s EBIT rose 7% to $21.8m.

E&A was reported to be undertaking due diligence on an acquisition target and has plans to continue to seek growth through acquisitions and internal means.

Fleetwood Corporation expected first-half earnings to be lower than for the same period last year, though earnings in the second half would be higher.

Monadelphous Group has prepared its shareholders for a second-half downturn although believed its revenues could hold up to December at levels similar to the first six months of last fiscal year.

Jacobs Engineering, the California-based provider of professional technical services, is interested in acquisitions in multiple business units and geographies after Jacobs’ pending acquisition of Australian engineering business Sinclair Knight Merz.

Matrix Composites and Engineering has seen unsolicited informal interest from companies seeking a corporate deal such as a potential merger over the past year. InterFinancial reported Matrix was currently focused on finalising potential strategic marketing agreements and aggressively growing its subsea umbilical, riser and flowline ancillary equipment division organically.

VDM late last year lodged a prospectus in relation to a one-for-one pro rata non-renounceable entitlement offer of 1.793 billion shares at $0.01 each to raise up to $17.9m. The company has also made a placement of 75m shares at $0.01 to a private investor, raising $750,000.

MWH, a Californiabased engineering business, is reported to be targeting acquisitions to expand in Australia. The company is mulling the acquisition of  several Australian design and planning businesses to grow its transportation capabilities. MWH expects transportation projects to make up around 40 percent of its Australian revenues as the company bids for design work, according to InterFinancial.

Geoforce, a privately owned provider of asset-tracking solutions for the oil and gas industry, could make acquisitions in select international markets as it aims to add international customers. The company would value a target that has a good list of local customers, but is not as interested in technology and systems that would require broad integration into Geoforce.

InterFinancial has released a chart and summary of recent activity in the Engineering and Mining sector: click here.

FOOD & AGRIBUSINESS MULTIPLES UP

InterFinancial research in late 2013 has revealed multiples in the Food and Agribusiness sector marginally increased in November. At the end of November, the sector traded on a forward PE ratio of 15.6x, compared with the ASX200 on 15.9x.

There was a solid amount of activity in Food and Agribusiness mergers and acquisitions.

InterFinancial reported that Archer Daniels Midland could consider acquiring some GrainCorp assets, establishing a marketing alliance, or look at returning with another takeover bid next year when the political environment settles down as it weighs up alternatives following the Foreign Investment Review Board’s (FIRB’s) prohibition of the proposed acquisition by ADM of 100 percent of the shareholding in GrainCorp. While the takeover offer was rejected, it was given approval to lift its 19.85% holding to 24.9%.

Meanwhile Olam Almonds Australia, the wholly owned subsidiary of Olam International, has entered into a sale and lease-back agreement for its nearly 12,000 hectares of almond orchards for cash consideration of $200m. The transaction with Adveq Almond Trust, an Australian trust, involves the sale and lease-back of almond orchard land and trees as well as related farming and irrigation infrastructure in Victoria for 18 years, which could be extended or renewed by mutual consent. 

Select Harvests has agreed to buy 2,430 acres of land in the Riverland region of South Australia, which includes 680 acres of mature planted almond orchards. The purchase price for the land and mature orchard almonds is $11.9m and a value has also been agreed to acquire the rights to the 2014 crop.

APA Financial Services has acquired a Victorian dairy farm for $4.4m. The property will become part of the portfolio of APA’s Dairy Farm Investments, which aims to purchase 30-50 dairy farms and be producing 250 litres of milk each year within five years.

In the news and continuing to play out, according to InterFinancial, back in November Murray Goulburn announced an increased all cash takeover offer for Warnambool Cheese and Butter of $9.50 per share. This followed Saputo’s conditional increase in its all-cash off-market takeover offer from $9.00 per share to $9.20 per share if Saputo reaches a relevant interest in Warrnambool of greater than 50% during the offer period which was extended to December 20.

Since then, the struggle has morphed and the latest position is that Bega Cheese announced in January it would leave the $500-million-plus race for Warrnambool, outlining plans to sell its 18.8 percent stake to Saputo. This would catapult the Montreal-based company’s holding to more than 45 percent, making it the single biggest shareholder, but falling short of the 50 percent stake it was seeking.

Australian Agricultural Company told InterFinancial it was spending $27.1m to acquire the LaBelle and Welltree stations in the Northern Territory from PPB Advisory.

PPB has also found a buyer for the collapsed RM Williams Agricultural Holdings’ Inglewood Farms asset. An undisclosed price will be paid for the organic poultry operation by the Youngberry family in Queensland.

Kilcoy Pastoral Company, the Australian beef processing company, has been acquired by Chinese New Hope Investment Fund. A price was not disclosed for the abattoir, which has a production of over 265,000 grain-fed cattle per year.

Tandou Limited has purchased water entitlements for more than $24m and has added a 7450 hectare NSW Riverina farm to its portfolio.

Maruha Nichiro Holdings, the listed Japan-based marine products company, announced the acquisition of a 50 percent stake in Australia-based fishery company Austral Fisheries. The company’s 100% owned subsidiary Maruha Nichiro Seafoods will acquire the stake for an undisclosed sum from Spain-based Pescanova group.

In other activity highlighted by InterFinancial, Murray Goulburn in late November appointed an advisor to prepare a $500m equity raising. The company was thought to be raising the capital in order to fund its then $504m takeover offer for Warrnambool Cheese and Butter.

STAG Beef is stepping up preparations to float on the Australian Securities Exchange (ASX) after a series of meetings with offshore and domestic investors during the past month. InterFinancial pointed out it would be the largest agribusiness initial public offering (IPO) since PrimeAg in 2007.

Elders has announced a 2012-13 loss of $505.2m due to abnormal charges stemming from the divestment program for its automotive supplies and tree farms businesses, and has signalled a recapitalisation move for the remaining core operations.

Malcolm Jackman, Elders’ managing director and chief executive officer, has stepped down from his roles and will leave the company.

Harvey Fresh, the Western Australian milk producer, has attracted interest from overseas buyers. Italy’s Parmalat is the only interested group with existing Australian operations. Harvey Fresh is family-owned owned and could sell for more than $100m.

Ruralco has reported a 2012-13 net profit decline post-tax from $13.8m to $5.7m, with the underlying result also down 44%. The rural services group may also divest its 12% stake in rival Elders, according to InterFinancial. The company planned to review the holding, as well as whether to support Elders' potential recapitalisation. Managing director John Maher noted there was still logic in a merger with Elders, but a sale was also an option.

Foodco is reportedly interested in acquiring food and beverage outlets and coffee chains that have turnaround potential and complement its existing brands. Although Foodco is predominantly focused on organic growth, the Sydney-based company is constantly approached by food retailers experiencing financial difficulties.

Morlife, a family-owned Australian functional food manufacturer, recently received an unsolicited approach from a private equity firm seeking to invest $5m-$8m in the company, but InterFinancial said it was more likely to consider a silent investor, quoting Morlife founder Dr Warren Steward.

Australian Vintage is looking to expand its footprint in the US and is interested to hear from advisors regarding potential strategic partners. Potential partners in China could include state-owned enterprises or supermarkets, as they could provide a distribution footprint.

Goodman Fielder expects to lose between $8m and $10m of normalised EBIT in its NZ dairy unit after farmgate milk prices increased by over 40% since fourth quarter of FY13.

Patties Foods expects the underlying NPAT for the half-year ending December 2013 to be approximately 5% down on the previous corresponding period.

Seafarm, the Australian prawn farming business, is on the selling block and could fetch between $20m-$30m, according to InterFinancial.

Chongqing Grainowned rice, edible oil and flour agribusiness, is actively seeking to buy soybean or rapeseed farms in Australia. Its internal team is studying several potential targets and will visit Australia in early 2014 with a war chest of around US$131m.

TFS Corporation incurred a net loss of $5.14m in the three months ended September 30, compared with a net profit of $2.57m for the first quarter last year.

GrainCorp chief executive Alison Watkins announced her resignation to take the top job at Coca-Cola Amatil.

Metcash made a net profit of $98.9m for the six months to October 31, up from $82m for the same time last year. Underlying profit however, which excluded one offs like the exit from the Franklins business, was down 2% to $119m. Metcash is splitting its food and grocery business into two, reversing a decision last year to merge the operations.

Forest Enterprises Australia’s assets have been put on the market by their administrators and receivers and are expected to fetch at least $200m.

Select Harvests will abandon plans to develop almond orchards in Western Australia. After a write-down of assets at its Western Australian greenfield development, the board decided the company would make its exit.

COFCO, the Chinese state-owned food and agriculture conglomerate, is closely eyeing meat processing acquisition opportunities in regions noted for their animal husbandry industries such as Australia, New Zealand, Europe and South America.

Lion Nathan, the Japanese-owned food business, has been in dicussions over the last few months with dairy group Parmalat Australia over a joint venture for milk production. Murray Goulburn and Saputo have also been rumoured to be interested in the dairy processing business.

Wellard Group, the Australia-based livestock exporter, is believed to have hired consultants to assess a partial sale or restructure of the business. Increased competition across its largest export market for live sheep in the Middle East and its biggest cattle market, Indonesia, have curbed exports and resulted in a $53.2m loss for the year to June 30.

For a chart of InterFinancial’s research on recent activity in the sector: click here.

ICT MULTIPLES DIP AS ANTICIPATED

Multiples in the Information and Communication Technology (ICT) sector have dipped in line with the broader market, according to InterFinancial research leading up to December 2013.

At the end of November, the ICT sector traded on a forward PE of 16.6x, compared with the ASX200 on 15.9x. But there has ben a lot of interesting activity in Australia’s ICT sector as tracked by InterFinancial.

Freelancer successfully listed on the ASX and experienced their share prices initially grow to $2.60 per share, valuing the company at a high of $1.13 billion before closing at $1.60 per share. Freelancer recently turned down an offer to sell to Japanese recruitment company Recruit Co for $400m. Freelancer is forecast to make a profit for the first time of $1.6m on revenue of $18.3m.

Fairfax Media announced the acquisition of property data and mapping provider, Property Data Solutions, for total cash consideration of about $30m. InterFinancial said Property Data Solutions group was Australian owned and encompassed everything in ‘property’, from individual property research for property professionals to custom property mapping applications for large corporate and government departments.

Telecom New Zealand, the listed telco, has announced the sale of AAPT, the group’s Australian subsidiary, to TPG Telecom for $450m. InterFinancial speculated that Telecom New Zealand may become a target for takeover by Telstra following the sale of AAPT.

HomeAway, Inc., an online marketplace for vacation rentals, announced today it has acquired Stayz Group, the publisher of Stayz.com.au and the online vacation rental marketplace in Australia. The Stayz Group, which also includes Rentahome.com.au, TakeABreak.com.au, and YesBookIt, was purchased from Fairfax Digital, a division of Fairfax Media, for about US$98m in an all-cash transaction. Stayz, which generated $25.4m in revenue in FY13, has long employed a commission-based business model, which produces the majority of its revenue.

VroomVroomVroom, the privately held Australian car rental comparison and booking website, has received takeover offers but InterFinancial reported it was more focused on organic growth and not actively scouting for buyers. In 2014, the company will focus on B2B growth by developing strategic partnerships with travel brands that currently do not offer car rental booking and comparison.

Ooyala, a leading innovator in video streaming, analytics and monetization, announced it received a US$43m investment from Telstra. Ooyala will use the funds to accelerate engineering efforts focused on innovating its video streaming and analytics platform and to support accelerating growth both domestically and internationally.

Ingogo, the Australian taxi-booking app company, has received a $3.4m investment and the business is now valued at $25m. The company is expected to list on the ASX next year.

SEEK, the ASX-listed online classifieds company, plans to retain a controlling stake in Zhaopin, the Chinese employment website. SEEK plans to list Zhaopin but retain a controlling stake following the IPO.

IDP Education, the Australian education group, is considering an IPO this calendar year, according to an excerpt from a trading update by SEEK. IDP is well positioned for future growth across its student recruitment business in Australia and in other key markets such as the USA, UK, Canada and New Zealand as well as growth from IELTS, a leading English language testing business.

iBuy, the Asian e-commerce business, is planning to raise $37m through an initial public offering. The company plans to raise $37m at $0.32 per share. iBuy is raising capital to buy three businesses: Beecrazy.hk, Deal.com.sg and MyDeal.com.my and Dealmates.com. iBuy has signed purchase agreements with the three and has offered US$29.4m in cash and $35.9m in shares as consideration. New investors are being offered 32.7% of the business.

For an interpretive InterFinancial graph of recent activity in the ICT sector, click here.

HEALTH & MEDICAL MULTIPLES UP

Multiples in the Health & Medical sector increased in late 2013, according to InterFinancial figures. At the end of November, the sector traded on a forward PE of 22.2x, compared to the ASX200 on 15.9x.

There was steady activity in mergers and acquisitions as the year drew to a close.

InterFinancial reported that the Australian Government appointed Lazard to advise on the sale of Medibank Private with Herbert Smith Freehills and EY Australia, formerly known as Ernst & Young, assisting.

However Albano Healthcare, the listed New Zealand dental company, announced that the Archer Capital consortium withdrew its indicative non-binding and conditional proposal to acquire all of the shares in Abano.

Capital raising has been a resurgent feature of the sector. For example, Pacific Edge, the New Zealand-listed medical system provider and biomedical group, raised US$23.5m from a 2-for-15 pro rata renounceable rights offer of new Pacific Edge shares.

Ironbridge Capital is expected to pursue an IPO for Australian fertility business Healthbridge in the second half of 2014. The listing could raise up to $500m.

Reef Pharmaceuticals, the Australian drug development company, is reportedly looking to select a contract research organisation for pre-clinical studies for its patent-pending polyclonal antibodies designed to prevent HIV transmission.

Healthscope, the Australian hospital operator, is moving closer to a potential $4 billion IPO. Private equity owners TPG and Carlyle Group have not yet committed to an IPO, but meetings with fund managers in Asia represent an important step in the process of making that decision.

Minomic, a privately held Australian developer of prostate cancer biomarker, will initiate a sale process in mid-2014 after completing its 350-patient trial in the US. The New South Wales-based company is developing a non-invasive prostate cancer detector called MiStat, which uses a urine sample to detect a protein that is present in cancer cells.

Somnomed, an Australian developer of oral devices for sleep disorders, is keen on acquisitions that can help it enter Finland, the UK, Italy and Spain. InterFinancial reported it was assessing options to enter these markets including setting up operations, but was keen to enter via acquisitions if it could find the right opportunities.  Somnomed announced it would welcome approaches from advisors who can suggest suitable acquisitions.

Innate Immunotherapeutics Ltd, the Australian biotech, is planning an IPO to raise $12m. According to a revised prospectus, Innate plans to issue 60 million new shares at $0.20 per share.

Life Healthcare, the Australian medical device business, plans to raise $76.6m through the issue of 38.3m shares at $2 per share.

Japara Holdings, the Australian aged care business, plans to begin investor meetings for a potential IPO in late January. Japara plans to undertake a $500m listing in the first half of 2014.

EBOS Group, the New Zealand-based medical products group, has listed on the ASX under the code EBO. The $1.1bn acquisition of Symbion earlier in 2013 transformed EBOS into the largest diversified Australasian marketer, wholesaler and distributor of healthcare, medical and pharmaceutical products by revenue.

For a InterFinancial’s interpretive graph of recent activity in the health and medical sector: click here.

http://www.interfinancial.com.au/

• InterFinancial Corporate Finance Limited, an Industry Expert member of Queensland Leaders, is a leading specialist corporate finance advisor to mid-market companies and has particular expertise in providing independent commercial advice to both listed and unlisted companies concentrating on mergers and acquisitions and sourcing private capital and strategic advice. InterFinancial was formed in 1987 and is the Australian firm of Clairfield International, an international corporate finance partnership that provides advisory services to clients ranging from family businesses to large multinational corporations and private equity funds.

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