Virtus Health (ASX: IVF)

By Jason Fittler

This is will be the sexy float of the year. 

It is a medical business dealing in IVF, which is a nice change of pace from all of the mining floats.

I understand that IVF has been heavily oversubscribed in fact there is no general public offer available. 

I expect a spike in the price but this will speculative and not based fundamentals.

Virtus is an Australian healthcare services company whose main activity is providing patients with Assisted Reproductive Services, but which also has significant revenues from specialised diagnostics and day hospitals. 

Virtus is the largest provider of Assisted Reproductive Services in Australia with an approximate 35% share of IVF Cycles performed in 2012.

Under this offer the company is raising $338 million, by offering 61 million shares at $5.68 per share.

IVF will also be drawing down on a $145 million loan facility and using the $20 million cash to raise $504 million. The funds will be used to pay back syndicated finance debt of $262 million, buy back shares from existing shareholders for the cost of $221 million, payment to the brokers selling the IPO of $17 million and others expenses of $2.5 million. Leaving  $1.5 million in cash. 

After the float the current shareholders will only hold 25% of the shares in the company, these are escrowed until 2016.

Despite solid earnings forecasts, no dividends have been allowed for at this stage. 

I will not be recommending this IPO. 

For more information on Virtus Health (ASX: IVF) please contact us on 07 4771 4577.