Arvida IPO price set at 95c

21 November 2014

Arvida IPO price set at 95c

Strong demand from New Zealand and Australian institutions and NZX firms has seen the new national retirement village group Arvida Group Limited (Arvida) raise the full initial $75 million sought through its Initial Public Offer. The Price for the Offer was set at 95 cents a share following a successful book build process. The Priority Pool for existing residents, staff and investors in the retirement villages and aged care facilities for a further $5 million, opens 27 November 2014.

The funds raised will enable Arvida to repay debt and provide flexibility to undertake the development of more than 160 new units at existing villages and later consider earnings accretive acquisitions to expand the geographic spread of its 17 foundation villages.

Arvida Chairman, Peter Wilson, says he is thrilled at the strong demand for Arvida shares.

“Arvida is delighted by the broad range of support for the Offer and the introduction of new shareholders to support Arvida’s strategy to be a leader in the provision of high quality aged care.

Arvida has identified an opportunity for growth and further consolidation in the sector, to meet the demands of New Zealand’s ageing population for a continuum of care in facilities that meet their expectations.”

“The Board has chosen to set the Offer price near the top of the indicative price range of 85 cents to 100 cents a share as striking a balance between the interests of existing shareholders and the Company’s future as an NZX Main Board listed entity.”

Chief Executive Bill McDonald says the immediate focus for the Company is to complete the integration of the 17 foundation villages and the establishment of a support centre for the existing village management teams who will remain in place.

“For our 1,800 residents it will be life as usual as Arvida’s approximately 1,000 staff continue to deliver high quality care and services across all our facilities in the North and South Islands. Our goal is for Arvida to become a natural choice for those seeking excellence in the provision of retirement village living with an emphasis on aged care.”

Approximately 54% per cent of Arvida’s residents are in aged care facilities with a further 25% in serviced apartments.

Based on the final price, Arvida will have a market capitalisation of approximately $214.2 million upon listing. The Company’s prospective financial information is projecting a net profit after tax of $10.6 million, and underlying profit of $13.3 million, for the first full year of operations ended 31 March 2016.

The Board intends to pay quarterly dividends amounting to 60-80% of underlying profit per annum.

The first dividend is scheduled to be payable for the quarter ending 31 March 2015 and total cash dividends anticipated to be declared in FY16 plus imputation credits are expected to deliver a gross dividend yield of 5.9% (assuming a dividend of 70% of underlying profit) on the offer price.

The Broker Firm Offer opens on 27 November and closes at 5pm on 15 December 2014. An Investment Statement including an application form can be obtained from participating NZX firms.

Arvida’s shares are expected to be listed on the NZX Main Board on 18 December 2014 and will trade under the code ARV. (Dates are indicative only and may be amended)

The Arranger for the offer is Forsyth Barr.

The Prospectus and Investment Statement are available at www.arvida.co.nz.

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