Reported in todays Australian.When it comes to floating the DDH1...

Reported in todays Australian.

When it comes to floating the DDH1 Drilling business, the challenge for owner Oaktree Capital Management is shaping up to be convincing fund managers to outlay money for a business that operates in the mining services space.Early investor meetings for an initial public offering of DDH1 Drilling were held on Thursday, and the feedback from fund managers is that the business is a strong performer in its sector, but they say that their appetite for drilling companies is low.DDH1 generates $220m of revenue annually and $30m of earnings before interest and tax. It has plans for an IPO through Macquarie Capital and UBS.READ NEXTTRAVELStep inside the hidden palaces of RomeJASON MOWENEarly estimates are that the business is worth about $400m, although sources close to the company say it could be worth closer to $500m.DDH1 is Australia’s largest diamond-core drilling contractor and it is expected that less than half of the business will be sold down via an IPO, with founders Murray Pollock and Matt Thurston to retain their stake.Drilling companies are performing relatively strongly at a time when many of the multinationals have left the Australian industry or have under invested, enabling DDH1 to increase its market share.However, drilling companies are not thought to have much pricing power due to the number of industry players and building a competitive difference can be challenging, according to some fund managers.