ALL eyes are on private equity following TPG and The Carlyle Group's $2.7 billion winning bid for Healthscope, and everyone is waiting to see what the cashed-up private equity groups will do next.
One company that is in the doldrums – and perhaps fits the bill due to its questionable management profile – is Nufarm.
The company has such an issue with transparency that analysts say it is difficult to put a real valuation on it, according to The Australian Financial Review.
For example, RBS Morgans values it at $3.62 on a discounted cash flow basis, compared with Merrill Lynch's $4.47 and Goldman Sachs JBWere's $7.95. Nufarm is trading at a price to earnings multiple of 16.3, compared with an industry average of 19.1 on Merrill Lynch's numbers.
Nufarm, which has about $300 million of debt due for refinancing by the end of December, is frantically trying to renegotiate a debt covenant relating to interest cover. But longer term, the sector remains attractive and Nufarm does have a distribution network in most global agricultural markets and a large portfolio of product registrations.
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