BrisConnections Plunges 56% After A$1.23 Billion IPO (Update1)...

BrisConnections Plunges 56% After A$1.23 Billion IPO (Update1)

By Jason Scott

July 31 (Bloomberg) -- BrisConnections dropped 56 percent as the venture between Leighton Holdings Ltd. and Macquarie Group Ltd. started trading in Sydney after its A$1.23 billion ($1.16 billion) initial public offering.

BrisConnections, the country's second-biggest initial public offering this decade, tumbled to 44 cents on the Australian stock exchange as of 1:31 p.m. in Sydney, from its A$1 sale price. The Brisbane-based group is also seeking about A$3.1 billion in debt.

Leighton, Australia's biggest builder, and Macquarie Group, its biggest investment bank, set up the venture in May to manage a project to build A$4.8 billion of roads in Queensland state. Investors have dumped shares of Australian investment trusts this year on concern their use of high debt levels to expand and acquire assets is too expensive amid the global credit squeeze.

``There's no doubt this is going to leave a very sour taste in investors' mouths,'' said Angus Gluskie, who helps oversee about $500 million at White Funds Management in Sydney. ``It's a sector that's got a very bad feeling about it at the moment.''

Babcock & Brown Ltd. and Macquarie Group, which manage a total of more than A$300 billion in assets, have been caught n the rout, losing 76 percent and 33 percent respectively this year. Macquarie shares fell 0.3 percent to A$51.20.

BrisConnections was picked as preferred bidder for links to Brisbane airport that include the nation's longest road tunnel at 6.7 kilometers (4.2 miles). The 45-year concession will see the company design, construct, operate, maintain and finance the road.

Biggest Since Boart

Deutsche Bank AG, Credit Suisse Group, JPMorgan Chase & Co. and Macquarie, Australia's biggest investment bank, managed the initial share sale.

The offering is the largest in Australia since Boart Longyear Ltd., a provider of drilling services to mining companies including BHP Billiton Ltd., raised about A$2.3 billion in April 2007.

Transurban Group, an owner of toll roads, and Babcock & Brown Power have tumbled in Sydney this year after cutting dividends, fueling doubts about their debt-driven business models.

Shares in Transurban have fallen 20 percent this year and were trading at A$5.19 today. Babcock Power, Australia's biggest publicly traded electricity producer, was trading at 67 cents after tumbling 75 percent since the start of 2008.

Stapled units in BrisConnections were subscribed for on an installment basis, with A$1 paid on application and two further installments of A$1 each payable in nine months and 18 months, the company said in a statement to the exchange today.

To contact the reporter on this story: Jason Scott in Perth at [email protected]

Last Updated: July 31, 2008 00:17 EDT