Broker group Steadfast will have an equity interest in 62 insurance brokerages, four underwriting agencies, a major premium funder and two “ancillary services” firms when it begins trading on the Australian Securities Exchange (ASX) on August 12.

The company’s prospectus, which was released late on Friday, says the retail offer period will begin on July 11 and close on July 26.

Up to 469 million shares will be being issued under the initial public offering (IPO) with a total of 467-545 million shares after completion of the offer.

The indicative price range for shares is $1-$1.20, giving Steadfast a market capitalisation of $545-$622 million, depending on the price. The company has also reserved the right to delay the float.

Following listing, Steadfast will operate as both a broker cluster group for brokerages which have not sold shareholdings – to be known as Steadfast Network Brokers – and a broker consolidator group through those brokers it has bought into, which will be known as Steadfast Equity Brokers.

The prospectus says Steadfast Equity Brokers will produce 70% of the group’s income, compared with 13% for the Steadfast Network Brokers, 6% for its underwriting agencies, 6% for its share in Macquarie Premium Funding and 5% for the ancillary businesses.

The equity brokers – under which the company’s shareholding in brokerages ranges from 25%-100% – has some (but not all) features of the model used in rival listed group Austbrokers’ “owner-driver” system. The prospectus says key management personnel at each Steadfast Equity Broker will hold the remaining equity interests in most of these businesses.

“The Steadfast co-ownership model supports the retention and alignment of key management personnel through ongoing equity participation,” it says.

“In addition to organic growth, Steadfast’s highly valued relationships with Steadfast Network Brokers or other non-aligned brokers positions it as the natural acquirer of further equity interests in Steadfast Network Brokers. As such, Steadfast may seek to undertake further acquisitions post-listing.”

The IPO will only proceed if Steadfast is able to complete acquisitions representing at least 93% of the aggregate purchase price. In the unlikely event of a shortfall, the board says it will reconsider proceeding with an initial public offering and list on the ASX at a later date

Chairman Frank O’Halloran says in a foreword to the prospectus that the IPO “will position Steadfast to take advantage of significant growth opportunities given the potential for further consolidation of insurance brokers and the ability to enhance cross-selling of products distributed through the Steadfast Network”.

The company’s key future strategies are identified as growing shareholder value through maintaining and growing Steadfast’s market position in the provision of insurance and related services, with a core focus on general insurance broking.

More details in ANALYSIS