ASX IPOs: Advanced Innergy's $400 million debut tests industrial appetite
Advanced Innergy lists Friday after raising $150n. Here's what you need to know about the industrial manufacturer..
Source: iStock
Mentioned
KEY POINTS
- Advanced Innergy has a strong competitive moat with 181 patents and 93 type approvals that would take new entrants years and significant capital to replicate, while 70% of revenue comes from repeat customers and long-term relationships.
- The company is profitable and growing, with FY26 forecast EBITDA of $62.3M and NPAT of $28.9M, trading at 7.2x and 14.6x multiples respectively, slightly higher than recent industrial IPOs like Tasmea and Symal.
- Renewable sectors now account for approximately 50% of group revenues, with the company planning to use $78.8M of IPO proceeds for M&A strategy and growth initiatives across its $6.5 billion addressable market.
The IPO market is heating up, and I'm on a mission to take a closer look at all upcoming listings, providing key data and insights ahead of their ASX debut.
Advanced Innergy Holdings (ASX: AIH) manufactures insulation, buoyancy, cable protection and fire protection systems for energy and industrial sectors. The company is set to list on Friday, 31 October after successfully raising $150 million at $1.00 per share.
At a glance
This is one of the more interesting IPOs in recent weeks, given:
Size: Indicative market cap of $422.3 million
Profitable: FY26 forecast EBITDA and NPAT of $62.3 million and $28.9 million respectively
Valuation: FY26 forecast EBITDA and NPAT multiple of 7.2x and 14.6x respectively
The Chairman's letter (page 11 of prospectus) highlights a few interesting points about the business:
"A new entrant would need to replicate 181 active and pending patents, secure 93 type approvals (each requiring 12-18 months and costing up to $2 million each)
"AIH generates revenue across seven specialised product groups: subsea insulation, subsea ancillaries, fire protection materials and jackets, offshore wind cable protection, marine flotation, water intake risers, and battery safety materials and testing."
The product groups have a collective addressable market estimated at $6.5 billion in 2024
Approximately 70% of revenue is generated from repeat work and long-term relationships
Renewable sectors now generate approximately 50% of group revenues (as at FY24)
Earnings history
The below table summarises AIH's pro forma financials.
FY22 | FY23 | FY24 | FY25e | FY26e | |
|---|---|---|---|---|---|
Revenue ($m) | 216.8 | 236.7 | 289.2 | 334.2 | 387.8 |
% Chg | ~ | 9.1% | 22.1% | 15.5% | 16.0% |
EBITDA ($m) | 16.5 | 28.7 | 39.3 | 56.4 | 62.3 |
% Chg | ~ | 73.9% | 36.9% | 43.5% | 10.4% |
NPAT ($m) | -0.7 | 7.1 | 10.9 | 24.4 | 28.8 |
% Chg | ~ | NA | 53.5% | 123.8% | 18.0% |
The criteria
Below, we'll assess whether AIH checks off the common ingredients for a successful market debut. You can read my piece about it here.
Underwritten: Fully underwritten by Henslow and Morgans.
Options: The prospectus vaguely mentions options as part of director remuneration. The joint lead managers (Henslow and Morgans) do not appear to have been issued any options.
Track record: Morgans is a staple name in the IPO space. No further commentary needed, as they support companies of all types and sizes to market. Henslow is a boutique firm that has acted as lead manager for IPOs including Atomos (AMS), MyDeal (MYD) and Sensera (SE1).
Near-term catalysts: The company plans to use the $150 million in proceeds as follows (page 29 of the prospectus):
$78.8 million (52.5%) for M&A strategy, of which $33.2 million will be used to repay debt funding used for the recent Ovun acquisition
$60 million (21.9%) for partial existing owner selldown
$11.2 million (7.5%) for transaction costs associated with the IPO
Substantial shareholders: The top 20 hold 89.3% of the company, making for a very tight register. Around 61% of all outstanding shares are escrowed until at least 30 September 2026. Founder Simon Shepherd owns 41.4% (post-IPO) of the company, followed by CEO Andrew Bennion (7.4%) and CFO Andrew King (2.5%).
Time and place: Fairly bullish backdrop for small caps, with the ASX Emerging Companies up 22.5% since August but down around 9% from its 17 October record high. We've seen a lot of successful industrial sector IPOs in the past 12-24 months, including Tasmea, Alfabs, Symal and Bhagwan Marine. Although most of these IPOs had a relatively lacklustre debut and traded sideways for several weeks (if not months) before breaking out (Bhagwan is still moving sideways). AIH has been priced at a slightly higher multiple relative to Tasmea (10.1x NPAT at the offer price) and Symal (10.5x NPAT).
Investor demand: AIH raised the $150 million it was seeking. It remains unclear whether the IPO was oversubscribed.
The bottom line
Advanced Innergy marks an interesting IPO among the sea of gold and copper debutantes in recent months. The company has logged several consecutive years of solid top-line growth and has been profitable since FY23. The Chairman's commentary points to a strong moat, along with a large percentage of recurring revenues from major clients.
Given how similar industrial-related companies have performed (Tasmea, Alfabs etc.), it wouldn't be surprising to see a lacklustre debut or flat performance over the next few weeks or months. Though once these companies start to deliver on growth and prospectus expectations, they tend to perform quite well.
