Inside the world of business
PCH flotation in Hong Kong inching closer to reality
THE WORST-KEPT secret in the technology sector – the flotation of Cork-headquartered PCH International on the Hong Kong stock exchange – is inching closer to becoming a reality. The Wall Street Journal, citing sources “familiar with the situation”, said PCH is planning to raise $200-$250 million (€146-€182 million) in a listing during the fourth quarter.
Officially PCH is maintaining its stance that “a listing in Hong Kong is one of a number of options which the company is considering to raise finance for expansion”.
If the group does goes ahead with the Hong Kong listing it would be the first major IPO by an Irish technology company for over a decade. And at the scale flagged by The Wall Street Journal it would be the largest public fundraising ever in the Irish tech sector. When Iona Technologies floated on the Nasdaq exchange in New York in February 1997, it raised $140 million, which at the time was the fifth-largest initial public offering in the history of Nasdaq.
That PCH is being linked with such a large flotation demonstrates the investor appetite for consumer electronics plays. The shining example is Apple’s soaring share price, which has held up in the face of global market turmoil and its charismatic founder Steve Jobs stepping down as chief executive.
Although nominally headquartered in Cork, the bulk of PCH’s activities are in southern China, where it designs, builds and ships accessories for electronic devices such as smartphones, tablets and digital music players. In many cases it does this on behalf of some of the biggest technology brands on the planet. Because consumers don’t like to think their headphones or smartphone case has been manufactured and shipped to them by a little-known Irish company, PCH keeps its customer list a closely guarded secret. It has, however, regularly been linked to a certain Californian company with a buoyant share price and penchant for products beginning with the letter i.
An IPO would be a personal milestone for PCH founder Liam Casey and it would also more than likely lay bare its customers’ identity. When that list is revealed, investors will be much better positioned to decide if PCH warrants a valuation that now looks to be far north of half a billion dollars.
Origin Enterprises future not yet certain
REPORTS FROM the UK that Origin Enterprises has been approached by a private equity firm should come as no surprise.
It has long been expected that Aryzta, Origin’s 71 per cent shareholder, would eventually sell off the business which was hived off when IAWS merged with Swiss company Hiestand.
Aryzta has been busy expanding its presence on the international baked goods scene, while Origin Enterprises has been carving out a niche in the agri-services business, quietly making acquisitions in the UK, and impressing analysts and investors with strong ebitda figures and a solid net debt position.
The obvious question is how a northern Europe-based fertiliser and feed company strategically fits into the international world of baguettes and part-baked products.
But while a sale of Origin may make sense strategically, there are other factors. Origin’s strong performance means it has fed nicely into Aryzta’s earnings per share. There is also the difficulty in completing a sale at the right price in this economic environment. As IFG shareholders learned this week, talk is cheap, and even the most advanced sales processes can founder when finance is so thin on the ground.
The £400 million price-tag that has been mentioned in relation to Origin appears to undervalue the company, and whether Aryzta judges this to be the right time to move may depend on how much it needs the cash.
All may be revealed in the next two weeks when both Aryzta and Origin are due to publish full-year results.
Communicorp Group’s broadcasting wishlist
Denis O’Brien’s Communicorp Group has set out its wishlist for what the Broadcasting Authority of Ireland (BAI) should do to make the company’slife a whole lot easier – and cheaper. “Measures to restore the viability of the sector” is how it sees it, of course. Communicorp declares it “supports the Independent Broadcasters of Ireland” in its call for a review of State funding of RTÉ – as well it might, given its radio stations are members of the IBI.
The licence fee is an easy target. But while the commercial broadcasting sector would love it to be slashed or abolished, the political difficulty in doing so (it would permanently cripple the national broadcaster) means RTÉ’s competitors are content to play a long game, seeking to chip away at the proportion of the revenues that goes automatically to RTÉ. Communicorp proposes that the BAI levy (paid annually by broadcasters) be funded from the licence fee pot, for example, while the commercial sector at large wants more money diverted into the Sound and Vision fund.
This fund is intended to give independent broadcasters cash to make “high quality programmes on Irish culture, heritage and experience, and programmes to improve adult literacy”. At the same time, Communicorp is itching for the BAI to relax its requirements on the time radio stations must devote to news and current affairs – that expensive public service stuff it would rather leave to the likes of RTÉ.
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Today
The CSO will provide insight into the jobs market by releasing the Quarterly National Household Survey, while the Oireachtas Joint Committee on Finance, Public Expenditure and Reform will hear from Anglo chairman Alan Dukes and INBS CFO John McGloughlin.
