Terms out for Viva Energy IPOShare via Email

Viva Energy, which has exclusive rights to the Shell brand in Australia, is lining up for the year’s largest IPO. 

Sarah Thompson   Anthony Macdonald   Julie-anne Sprague
AFR

Fuel refiner and retailer Viva Energy is seeking to hit the ASX-boards with a $5.15 billion market capitalisation.

Viva Energy’s sponsor brokers Bank of America Merrill Lynch, Deutsche Bank and UBS sent terms to fund managers on Wednesday morning. 

According to the term sheet, Viva is seeking to raise at a range between $2.50 to $2.65 per share, representing a multiple of 6.5 times to 6.9 times forward earnings to June 2019. Listed rival and closest comparable Caltex is trading on a 7.6 times multiple.

The implied forecast yield is between 4.3 per cent and 4.6 per cent. Based on the offer price range, Viva’s indicative market capitalisation on the ASX boards is $4.86 to $5.15 billion.

Viva Energy owner Vitol is expected to retain a 40 per cent to 50 per cent holding, which gives a total deal size of $2.39 billion to $3.05 billion.

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A prospectus has been lodged with the Australian Securities and Investments Commission.

Viva Energy is seeking to become the year’s largest IPO in terms of funds raised and its market value. 

As Street Talk revealed this week, about half a dozen funds have already tipped the first $1.3 billion into IPO after Viva Energy’s brokers ran a cornerstone process last week. 

That means Viva Energy will come to market with roughly half of its IPO shares pre-sold. The exact price cornerstone backers and everyone else pays for shares will be determined at a bookbuild next month. 

Viva Energy is one of the country’s biggest fuel companies. It has 24 per cent of the downstream petroleum market, selling fuel and fuel products via the Shell brand in Australia and a refinery in Geelong.

Broker UBS expects it to report $634 million EBITDA in the 2019 financial y