wealth creation, page-3

Rush to list: get in before T3 sponge
Email Print Normal font Large font By Rebecca Urban
December 7, 2005

Advertisement
AdvertisementA SWAG of large companies planning to float before Christmas will take the new listings market to record levels for calendar 2005, with total raisings expected to tally $15.3 billion for the year.

Not since Telstra was first floated in 1997 have new listings raised so much money.

Interestingly, analysts at accountants Deloitte blame the impending third-tranche sale of Telstra shares next year, known as T3, for the flurry of activity - about 70 new listings - scheduled for this month.

The three biggest floats of the year, Spark Infrastructure, Goodman Fielder and SP AusNET, list this month. They are expected to raise more than $5.1 billion combined.

"The IPO market has been boosted by the convergence of three factors: strong returns from the Australian equity market, a continued flood of cash from superannuation funds and the T3 effect," Deloitte Corporate Finance partner Steve Woosnam said yesterday.

"Many large floats may have been timed to avoid competition for equity funds with T3, which was expected to be further advanced in its public offering process."

A report released by Deloitte shows that the value of the new listings market was expected to be 63 per cent higher this year than last year, when $9.4 billion was raised, while the number of companies going public has jumped 10 per cent to 187.

PricewaterhouseCoopers also released its preliminary report on the market yesterday, which suggests that the solid investment returns generated from new listings is helping to encourage others to list.

According to the report, which tracks companies that floated up until November 30, new listings were trading at their highest average share price premiums in six years.

Large floats - companies with a market capitalisation of $100 million or greater on their listing date - were trading at an average 24 per cent premium to their issue prices.

Small floats - those capped at under $100 million - achieved 17 per cent premiums to their issue price on average.

The best performing float so far this year has been Iron Ore Holdings, which is trading at an 855 per cent premium to its May issue price.

That is followed by Pipe Networks, which is up 450 per cent in six months.

Seven of the top 10 floats came from the resources sector, while the telecommunications sector produced the highest returns across all industries, with an average return of 251 per cent, while negative returns were recorded by the retail and consumer service sector, biotechnology sector and diversified resources sector.

Both large and small capital floats outperformed the ASX 300 index, which recorded 9 per cent growth over the same period.

Mr Woosnam and Greg Keys, corporate finance partner at PricewaterhouseCoopers, said that the economic signs indicated that the buoyant float market would continue next year.


BEST FLOATS OF 2005

Iron Ore Holdings - up 855pc

Pipe Networks — up 450pc

Carrick Gold — up 355pc

Monaro Mining — up 250pc

Curnamona Energy — up 200pc