One Fairfax shareholder has predicted that the worth of the embattled publisher could amount to $4 billion if its plan to list Domain separately on the ASX is put into action.
Speaking to the Australian Financial Review, Thorney Investment Group chairman Alex Waislitz strongly encouraged Fairfax not to abandon its plan to spin-off Domain.
“After all, private equity never seeks to take control of a company unless it can see a potential exit upside of at least 20 per cent within a few years,” he said.
“If Fairfax can demonstrate that it is the best candidate to realise that additional upside, then all existing [Fairfax] shareholders would get the benefit of any future value uplift rather than just the successful private equity bidder.”
Waislitz told the AFR that the prize for shareholders is the potential of Domain to be generating an EBITDA of $200 million or higher over time, which would value Fairfax at $4 billion – significantly higher than TPG and H&F’s current offers of $2.7 billion and up to $2.86 billion respectively.
“[Fairfax] shareholders must decide if that potential value uplift can be achieved by the existing team over time or whether it is better to exit now and leave private equity to pursue the upside,” Waislitz said.