UBS’s list of stocks attractive for PE buyouts

In a note sent to clients on Thursday, UBS Australia strategist Richard Schellbach passed its research coverage universe through two filters: strong free cashflow yields and low gearing .

The goal was to look at companies that would be good for a leveraged buyout on the two metrics - theoretically and purely from a numbers-only perspective. Top of the list was gaming solutions business Ainsworth Game Technology. It’s all of $377 million market capitalisation but had the best cashflow yield at 6.1 EV/FCF, and 108 per cent equity/EV.

Next on the list were: GrainCorp, BlueScope Steel, CIMIC Group, Platinum Asset Management, recycling business Sims, WA mining contractor NRW Holdings, clothing and footwear business Accent Group and fertiliser business Inctitec Pivot and Pnedal Group.Out of Schellbach’s list, two businesses are currently in play, albeit not from private equity suitors.

co-edits Street Talk, specialising in private equity, investment banking, M&A and equity capital markets. He has 10 years' experience as a business journalist and worked at PwC, auditing and advising financial services companies.

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