Michael Bruno, the owner and CEO of Land America Health and Fitness Co., which operates Star Trac, StairMaster and Schwinn, is preparing to take the company public in China with an initial public offering (IPO).
Bruno says he is in negotiations with Chinese investment banks, including China International Capital Corp. Ltd., to serve as Land America’s sponsor. Bruno also is interviewing accounting firms and attorneys.
The earliest that Land America can make an IPO in China is 2014. Bruno says a company has to show that it is profitable for three consecutive years before making an IPO.
“It gives us cash to expand our business,” Bruno says of the benefits of taking the company public.
Bruno adds that valuations—estimates of the value of a company—are higher in China than they are in the United States.
“In the U.S., you get 10 to 12 to 15 percent (multiples of earnings),” Bruno says. “[In China], you get 30 to 35 to 40 percent.”
Bruno says 90 percent of Land America’s production is done at his 800,000-square-foot plant in Xiamen, China.
“Manufacturing in China plays well in China, and it’s going to give us a chance for a very successful IPO,” Bruno says.
The Shanghai Stock Exchange is the larger of the two stock markets in mainland China. The other is the Shenzhen Stock Exchange. There also is the Hong Kong Stock Exchange, third largest in Asia behind Tokyo and Shanghai.
The Shanghai and Shenzhen stock markets operate as nonprofit organizations. The China Securities Regulatory Commission sets policies and oversees their activities. It is uncertain which exchange would be chosen for a possible Land America IPO.
According to a December 2011 article in The Financial Times, Chinese companies raised $73 billion from IPOs in Shanghai, Shenzhen and Hong Kong in 2011. That is double the amount of money raised on the New York Stock Exchange and NASDAQ combined, according to the article.
The Shanghai Composite Index slumped 33 percent the previous two years but is up 9 percent in 2012, according to a recent report by Bloomberg.
Core Health and Fitness LLC, Vancouver, WA, which is the corporate holding group for both Star Trac and StairMaster, is a subsidiary of Land America. Star Trac and StairMaster were consolidated last year. Dustin Grosz is president of both companies.
Bruno bought the StairMaster and Schwinn commercial assets from Nautilus, Inc. at the end of 2009 for $12.3 million. In 2010, he bought Star Trac. Terms of that deal were not disclosed.