Fantastic talks up to 11x profit for IPO.
It's down to the short strokes at furniture business Fantastic Brands and its pitch to return to the ASX boards via an initial public offering.
Management is due to wrap up meetings with potential investors on Wednesday night, before its brokers Credit Suisse and Macquarie Capital open the books on the mooted raising.
Fund managers reckon Fantastic Brands, which is the holding company for Fantastic Furniture, has been talking about a deal at nine to 11-times forecast profit, which would value the group at $430 million to $530 million based on forecasts in the group's pathfinder prospectus.
Rival listed furniture company Nick Scali is trading at 12.5-times next 12-month profit according to S&P Global Market Intelligence, while Harvey Normal Holdings is at 11.7-times and Adairs is at 12.9-times.
Fundies said formal terms for Fantastic's deal were yet to land, however the capital was due to be raised and a prospectus lodged with the corporate regulator later this week, according to draft timetables in front of potential investors.
The big question is how much owner Greenlit Brands will sell as part of the listing, which will ultimately determine the offer size.
Greenlit is a seller, which is why Fantastic Brands is lining up for an initial public offering only four years after Greenlit's predecessor, Steinhoff Asia Pacific, took it off the ASX-boards.
However funds were told it is price sensitive; towards the top of the price talk, Greenlit would be likely to let more stock go, while at the bottom end it's happy to retain more stock and wait for greener pastures.
The price and terms are expected to be determined and sent to fund managers in coming days.
Sales up 17.3% a year, EBITDA up 69.4%
Meanwhile, Fantastic management has also pitched Canaccord Genuity and Shaw and Partners' networks, hoping to find retail investor support for the company. The two brokers are co-lead managers.
Potential investors were told Fantastic sales had grown at 17.3 per cent a year over the past two years, which was more than double the wider Australian home furnishings market, while EBITDA was up 69.4 per cent a year, also on a proforma basis.
Fantastic forecast $47.6 million net profit in the 12 months to June 2021, according to numbers in front of fund managers, which would be up from $38.5 million in the year to June 2020. Sales were slated to increase to $650.7 million from $550.7 million.
The company said it had 81 stores, which double as service and fulfilment centres under the "click and collect" model.
