Recent price moves nothing to do with political or MMS earnings risk...
SG Fleet: IPO discount discussion back on agenda - AUSFIN 13-Feb-2014 01:02 Domestic fund managers have put the old 10 per cent initial public offering discount back on the agenda, after being scorched by a handful of overpriced floats in last year's rush to market.
SG Fleet and its brokers Goldman Sachs and Morgan Stanley discovered as much, as they went about raising north of $200 million for the leasing business. Much of the roadshow was spent talking about pricing and investors made it clear they wanted SG Fleet at about a 10 per cent discount to listed peer McMillan Shakespeare.
In the end, the fund managers won out (helped by McMillan's recent trading) and SG Fleet was repriced to $1.85 in time for Wednesday's book-build. Shares were to be allocated last night and Goldman Sachs and Morgan Stanley were expected to underwrite the deal ahead of Thursday's prospectus lodgement. Discussion around the discount would have been exacerbated by CHAMP Ventures' decision to sell its 41.4 per cent stake in full. CHAMP could afford to knock 20¢ off the book-build price, having well and truly covered its initial investment in the leasing company.
The IPO discount is something that went missing in last year's floats rush. Vendors, even private equity sponsors, were able to sell out in line with market valuations as fund managers got caught up chasing fresh growth.
Pacific Equity Partners also would have been watching SG Fleet. PEP's considering options over its stake in a joint venture of its own, SCA Australasia. SCA makes and markets toilet paper and other products in Australia. But it is understood before PEP can float the business or sell its stake, it has to get the approval of joint-venture partner Svenska Cellulosa Aktiebolaget.
It's a similar situation to SG Fleet, where CHAMP sold out but left its partner, South Africa's Super Group, in the asset.
MMS Price at posting:
$11.05 Sentiment: LT Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)