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Upcoming IPOs this week

Initial Public Offering (IPO)

Each week I like to look at the upcoming IPOs which are happening on the ASX. It gives me a chance to see if there are any future stars being listed and perhaps get in early on that success story.

Every single share that currently trades on the ASX was a newly-listed share at one point, they should not be avoided just because they are new.

A new float is usually when a private company is looking to sell a small or large portion of the business to new investors. The funds are typically needed for the growth of the business, such as buying property, funding product development or making an acquisition.

According to ASX Ltd (ASX: ASX) there are a few upcoming listings:

Kleos Space S.A (ASX: KSS)

Its principal activity is to launch and operate satellite infrastructure to generate unique, commercial data and sell the data as a service internationally.

It is launching low Earth orbit satellites in 2019 that will locate radio transmissions from devices such as VHF walkie talkies. It says that its data-as-a-service information is for users in the defence and security ISR market. It will capture data currently ‘hidden’ from detection.

This sounds like a good concept idea but it’s a very high-risk idea until it starts generating actual revenue. Indeed, some the performance rights for directors are based on achieving revenue of 2 million euros after the first year and four million euros of revenue after the second year.

It’s looking to raise $11 million through CHESS Depository Interests (CDIs) at $0.20 each and start trading today.

Primero Group Limited (ASX: PGX)

Its principal activity is as an engineering contracting company, specialising in providing engineering design and construction services to the minerals, energy and infrastructure sectors.

From concept to completion, the company says its multi-disciplinary skills provide enhanced performance throughout the total project lifecycle.

It’s looking to raise $25 million at $0.40 per share and start trading today, 9 July 2018.

Viva Energy Group Limited (ASX: VEA)

Its principal activity is the manufacture, distribution and supply of petroleum products to retail and commercial customers.

This is a long-awaited IPO. There’s several segments to Viva Energy.

It owns 38% of Viva Energy REIT Ltd (ASX: VVR), a REIT that owns service station properties and leases them to Viva Energy. It also owns 50% of Liberty Oil, an independent fuel retailer and wholesale distributor with a strong regional presence.

It supplies fuel (and lubricants) to over 1,100 sites, most of which are Shell-branded and operated by Wesfamers Ltd (ASX: WES). It supplies other operators and wholesalers.

Viva Energy also supplies fuel, lubricants and speciality products to commercial customers in aviation, marine, transport, resources and construction & manufacturing industries.

It also owns the Geelong Refinery in Victoria which converts crude oil into petroleum products.

The company comes with an implied forecast dividend yield for FY19 of 4.3% to 4.6% with a payout ratio of 60% of underlying net profit after tax (NPAT).

It’s looking to raise up to around $3 billion at $2.65 per share and start trading on 13 July 2018. It could have a market capitalisation of around $5 billion once listed. The p/e for FY19 is predicted by Viva to be between 13x to 14x.

Foolish takeaway

An interesting group this week. Viva is clearly the star listing, there won’t be many bigger IPOs this year. Although they all sound like interesting businesses, I won’t be investing in any. I personally don’t like resource-related investments and Kleos is far too speculative for me at this stage.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia owns shares of ASX Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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