Diverse Johns Lyng Eyes IPO
The Johns Lyng group is well known in insurance circles for its restoration building businesses, but majority owner Scott Didier has built a wider web of enterprises than most folk would appreciate.
Sadly or otherwise, peripheral businesses including a US golf tournament software house, a wine company and a home maintenance firm are not included in the deal.
A helicopter-flying entrepreneur and Carlton Football Club enthusiast, Didier owns the local Nike franchise – and it’s a nice little earner. “We would have liked it to have been in the float but for various reasons it’s not,” Didier says.
Johns Lyng has been around since 1953 but was acquired in 2003 by the energetic Didier, who left school at 16 for a flooring apprenticeship and then sold carpets door to door in the inner Melbourne suburb of Preston.
Along the way, he also wrote and produced Blinder, a drama about an Australian Rules footy club starring Jack Thompson (who else but?)
After years of conjecture Johns Lyng’s current owners – mainly Didier and former John Holland exec Lindsay Barber and PSC Insurance founder Paul Dwyer – are partly cashing in their chips by listing the company.
The IPO, which closes on October 16, is for $95.76m shares at $1 apiece, valuing the whole company at $220m.
Johns Lyng specialises in short-order insurance restoration work. While a blight for their victims, events such as Cyclone Debbie that inflicted $1.5bn of damage across Qld and northern NSW are a revenue godsend.
The Melbourne-based company also operates an emergency callout venture with the road organisations NRMA and RACV.
Johns Lyng will retain Didier’s model of offering equity partnerships to allow talented individuals – often very youthful ones – to have a stake in their division and share in profits.
According to the prospectus, Johns Lyng is expected to chalk up a $13.8m net profit on revenue of $278.5m. In 2016-17 the numbers were $11.5m and 249.7m respectively.
The stock is being offered on a current-year earnings multiple of 18 times and a dividend yield of 2.2-3.3 per cent.
Not that the pricey multiple has deterred heavyweight backers that reportedly include the listed insurance broker Steadfast, Wilson Asset Management and Ellerston Capital.
While investors should always be wary of IPOs motivated by vendors cashing in, the three main owners will continue to have meaningful skin in the game. Post his sell down of 30 per cent of his shareholding, Didier will continue to hold 26 per cent of the expanded register, while Barber and Dwyer will account for about 7 per cent each.
“We just want to expand and the listing is a good way of doing that,” Didier says.
The company has found a prize chairman in recently retired KPMG chairman Peter Nash, who assumes the role from former Carlton footballer (and ongoing Johns Lyng director) Adrian Gleeson.
The New Criterion is authored by Tim Boreham.
Many readers will remember Boreham as author of the Criterion column in The Australian newspaper, for well over a decade. He also has more than three decades' experience of business reporting across three major publications.
Tim Boreham has now joined Independent Investment Research and is proud to present The New Criterion, which will honour the style and purpose of the old column. These were based on covering largely ignored small to mid cap stocks in an accessible and entertaining manner for both retail and professional investors.
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