Tuesday, September 22, 2009

Myer Shares Set To Float

It looks like Myer shares will once again be available on the Australian stock market. The Myer IPO (Initial Public Offering) could well be wrapped up by the end of the year.

According to the www.mypieceofmyer.com.au website, the group "currently intends to lodge a prospectus with the Australian Securities and Investments Commission for the offering of shares in Myer Holdings Limited on or about 28 September 2009".

With the ASX indices racing ahead over the past few months, it may well be an opportune time for the float, providing the Aussie sharemarket doesn't fall over in the next month or two. We've managed to get through the 1st anniversary of the GFC, but October has been a diabolical month for investors in years gone by - although not so much in recent years.

Pre-registration for the Myer float is only available to the company's staff and for Myer One loyalty card members.

The TPG (Texas Pacific Group) led private equity consortium took the iconic retailer private just over 3 years ago. Since then they have managed to increase profits and (not surprisingly) management say that recent trading has been strong.

The interesting thing for me will be the structure of the new listed entity's balance sheet - or more specifically, how much debt it carries. The modus operandi in most private equity deals is the use a lot of leverage (debt) in the buyout. Sometimes when the shares are floated they still carry a significant level of debt. Repco is one of those situations which comes to mind. The cyclic nature of retailing along with excessive debt can be a risky combination.

I suspect that the issue will still be popular though. It is a well known brand which along with some heavy marketing aimed at retail investors should ensure the Myer share float is successful.