Silk Logistics is understood to have experienced strong demand for its float, with its cornerstone process already seeing most of the funds raised for its $70 million initial public offering.

It is understood that Silk has received two thirds of the total demand for the float in its cornerstone process alone, despite some investors earlier indicating they are sidestepping the deal due to the company’s asset light model.
Working on the IPO are advisers Shaw and Partners and Morgans, and the price achieved for the deal equates to about 12 times the group’s annual forecast net profit.

The company is planning to list with a market value of $155 million and $166 million including debt, which equates to 8 times its forecast 2022 financial year earnings before interest and tax of $21 million.

The company is chaired by Cleanaway director Terry Sinclair. It operates in two divisions, Port Logistics and Contract Logistics.

Silk’s earnings before interest and tax are forecast to be $17.8 million for the 2021 financial year, growing from $13.6 million in the 2019 financial year.

Shaw and Partners analysts earlier suggested a valuation range of between 10 and 12 times the group’s forecast EBIT for the 2022 financial year.

Locally listed peers trade on 18.9 to 19.9 per cent, the analysts said.

Article source: The Australian, 1 June 2021