Macquarie readies explosives IPO

Dyno Nobel, acquired last year by a Macquarie-led private equity consortium from Industri Kapital for US$1.7 billion, is looking to raise up to AU1$ billion in a Sydney floatation.

Macquarie, the acquisitive Australian investment bank, is preparing the floatation in April of explosives maker Dyno Nobel, the acquisition of which it led in September last year.

Dyno Nobel has announced an initial public offering of approximately 464.6 million shares at an indicative price of up to AU$2.27 a share, pegging the company’s market capitalisation at about AU$1.7 billion.

If the IPO goes ahead, it is likely to add to profits that Macquarie has already generated indirectly from the investment.

In addition to crystallising a return on its equity investment through the listing, Macquarie has been raking in debt, equity and advisory fees from the day it orchestrated the Dyno Nobel acquisition.

Initially the bank led a consortium of ten co-investors to acquire the business last year. Shortly thereafter, in order to overcome anti-trust issues, it arranged for the disposal of Dyno’s Latin America, Asia, European and African operations to Orica, a rival, for US$685 million. Macquarie also helped Orica to arrange funding for the deal. 

What the consortium retained was Dyno’s North America and Australia business – a commercial explosives company that supplies bulk and packaged explosives and initiation systems and provides distribution and other related services to coal, mining, quarry and construction companies in the two regions.

Next on Macquarie’s to-do-list is a partial exit through the IPO. The bank is looking to cut its current stake in Dyno Nobel from 21 percent to 4 percent as the company offers 57 percent of its shares to investors.

According to a spokesperson for the bank, the consortium is not expected to retain more than 40 percent of Dyno Nobel.

“The issue of shares will provide a mechanism for existing shareholders to realise a portion of their investment,” Dyno Nobel said, adding that the IPO will also “provide Dyno Nobel with an appropriate capital structure and the financial flexibility to pursue growth opportunities as well as providing access to capital markets and a liquid market for shares”.

Macquarie has not identified the other members of the equity syndicate. However, the Australian Financial Review points to Barclays Global Investors and Colonial as part of the ten-strong group that invested a combined A$370 million in the purchase. Macquarie is said to have put in A$100 million.