The Tartak family will retain 104.7 million shares of Bingo post-launch, worth $188 million at the issue price. That 30% stake is locked in until the end of 2018. The Tartak family will receive $348 million in cash from the float and another $72 million from the sale of real estate to the listed entity.
The group has made 14 acquisitions since mid-2013 in a sector undergoing rationalization and is considering new acquisitions as part of its expansion strategy.
Bingo chairman Michael Coleman, who is a director of Macquarie Group, said in a letter to potential investors that the company was a leader in construction and demolition waste collection in Sydney and that its presence in waste collection in the commercial and industrial market was growing strongly, largely due to “market share gains”.
The commercial and industrial waste collection service only started in 2013-2014, but should generate revenues of $31.7 million in 2016-2017.
Mr Coleman said broad sector momentum was going in the right direction for bingo, with strong investment in infrastructure and population growth driving demand, while there was a ‘clear preference’ for diversion waste from landfills by governments, businesses and consumers, and this has increased the importance of recycling.
Australia’s waste management industry as a whole grew at a compound annual growth rate of 7.2% between 2007 and 2015, the prospectus says.
Bingo’s profit and revenue growth targets are aggressive. The company forecasts revenue on a pro forma basis of $203.4 million for 2016-17, rising to $259 million in 2017-18.
After-tax net income is expected to nearly double to $31.1 million in 2016-17, then climb to $40.7 million the following year.
Bingo Bins, headquartered in Sydney’s western suburb of Auburn, is estimated to have a market share of 24% of the construction and demolition waste collection market in New South Wales. The company said it is “currently exploring opportunities to enter other eastern seaboard states first and then the other states and territories of Australia.”
Bingo expects its shares to begin trading on the ASX on May 3. At the offer price of $1.80 per share, the company has an indicative market capitalization of $628 million, with the offer priced at a multiple of 15.4 times 2017-18 projected net earnings. after taxes. The lead free float manager is Macquarie Capital.
Five family trusts owned by various members of the Tartak family each owned 20% of the company prior to the IPO. Four of the trusts will reduce their stake from 20% to 3.2%, while a trust associated with Daniel Tartak will reduce its stake from 20% to 17.1%, its stake being diluted by the broader capital raising.