IAWS to begin flotation process soon

Philip Lynch will start the process of floating the IAWS co-operative society in late April or early May, following its agreement to acquire Cork-based SWS Co-op for €64 million.

Shareholders in the IAWS co-op, where Mr Lynch is chief executive, will be called to a special general meeting at which they will vote on converting the society into a body corporate. Presuming the motion is passed, Mr Lynch will move to change the co-op's structure so that its shares can be openly traded.

It is thought that he has yet to decide on the best way to achieve this. The options include a full listing on the Irish market, a listing on London's Alternative Investment Market and a move to trading shares on a grey market.

The most obvious existing example of grey market trading in the Republic is provided by infrastructure group, NTR, where the IAWS co-op recently built up a 26 per cent stake.

NTR is not listed on the stock market but its accounts comply with listing requirements and its shares can be traded privately through a number of Dublin brokers.

Ultimately, Mr Lynch is thought to favour a listing on the Irish Stock Exchange.

The IAWS Co-op's conversion to a body corporate is not expected to receive any opposition from the company's members, comprising more than 40 co-ops including Kerry, Glanbia and Dairygold. The shift is likely to deliver considerable instant value to these members, since it will bring liquidity to their shareholdings and thus promises to substantially raise their worth.

It is believed Mr Lynch expects the conversion to be complete at some stage between October and next January, with the timing dependent on the society being able to prove a credible earnings line.

The company is likely to be re-launched as an infrastructure solutions play. The Irish market does not currently have any listed firms in this sector.

Upon conversion, the co-op should be able to point to its SWS assets - which are concentrated in finance and renewable energy - as the primary driver of profits.

Rough estimates suggest that the company will be worth between €250 and €350 million at that stage, with earnings before interest and tax in the region of €25 or €30 million. Turnover could be in the order of €100 million.

Aside from the 26 per cent stake in NTR, and an 11 per cent holding in IAWS plc, the IAWS co-op's other assets include full ownership of bakery Irish Pride, a rendering business in Ballinasloe and a 45 per cent stake in French fertiliser company Cedest Engrais. The company also has some property assets, mostly in Cork.

It pulled out of a bid for cable company NTL earlier this week because it no longer saw value in the proposal, which was being led by Setanta.

The SWS deal is unlikely to be the last acquisition to be pursued by the IAWS co-op as it proceeds towards a listing. Much speculation has focused on the firm's intentions towards NTR, where it aggressively built up its stake at the start of this year.

Mr Lynch is rumoured to be eyeing a takeover of the firm's waste business, Greenstar, as a favoured option.