SYDNEY--Mantra Group, an Australian hotel operator backed by Hong Kong-based CVC Asia Pacific Ltd. and UBS AG, plans to raise 500 million Australian dollars (US$448 million) in a public listing before Easter, two people familiar with the deal said.
The company had a strong response from Asian investors at an introductory roadshow in January, and it plans to make a final push to raise interest with another in the second week of March, the people said.
The push to list Mantra comes as dozens of Australian companies try to lure investors into initial public offerings as confidence returns to market, but where a number of introductory roadshows have failed to gain traction.
Mantra's goal is to create a listed rival to competitors like France's Accor SA and Oaks Group, a subsidiary of Thailand-based Minor International PCL, according to the people.
The Australian company manages and leases tourist properties and markets them under three main categories—the budget BreakFree label, a midmarket range dubbed Mantra, and the Peppers luxury-resorts brand. It manages 116 properties in Australia, New Zealand and Indonesia.
Mantra's advisers UBS and Macquarie Group Ltd. have been stressing to investors the earnings potential from rising Chinese tourism to Australia, a third person familiar with the deal said. They have also highlighted Mantra's plans to expand into Thailand and boost its presence in Indonesia.
The number of visitors from China rose almost 20% in the year through September, according to Tourism Australia, which hopes Chinese tourism will generate A$9 billion for Australia in 2020, compared with around A$4.2 billion in 2012.
A Deloitte Access Economics paper this month separately predicted national hotel occupancy rates over the next three years would climb to almost 70% from around 67% currently.
Meanwhile, a UBS report this month showed short-stay tourist arrivals from all over the world rose by 9% last year, rebounding from a slump between 2005 and 2011 as a near-record-high Australian dollar kept visitors away. The Aussie weakened by about 15% last year.
"With the Australian dollar peaking in 2011, there appears to be a renaissance in short-term arrivals," the UBS report said.
The sharp rise in tourism from China and elsewhere in Asia has also been supported by a pickup in the number of airlines targeting Australia with low fares, including Malaysia'sAirAsia X Bhd., Singapore's Scoot and China Southern Airlines Co.
Mantra's chief executive, Bob East, said earlier this year that Mantra was tracking 10% above expected earnings before interest, taxes and amortization for the 2014 financial year ending June, which look set to eclipse the previous year's Ebitda of A$63 million. Still, to maintain growth, the company will need to continue winning management rights over new properties.
Some Australian holiday resorts have struggled as the Australian dollar peaked, and remain in a state of disrepair. The price of holiday investment properties in Queensland state's Gold Coast have crashed by as much as 50% in recent years, damping interest in new developments.
To compensate, Mantra has been looking to Southeast Asia. It recently opened its first Asian resort, in Bali, and plans to open another one nearby next month. Mantra's Mr. East said last year that the company wanted to open 20 more hotels in Indonesia over the next three years, and a similar number in Thailand over six years.
An IPO would be a welcome opportunity for majority owner CVC to exit what has been a troubled investment. Mantra Group was originally one half of CVC's leveraged buyout of Global Voyager Holdings Ltd., which also included the travel agency Stella Travel Services Ltd.
Mantra and Stella were demerged in 2009 in a deal between private-equity owner CVC and lender UBS. The agreement saw CVC and UBS convert almost A$1 billion Global Voyager debt to equity, barely a year after CVC bought the business following massive write-downs in the Stella businesses.
CVC and UBS now control 60% and 40% of the restructured companies, respectively. CVC and UBS tried to sell Mantra Group in 2012, but struggled to find the right buyer.
Source: Wall Street Journal by Daniel Stacey
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