Thursday, January 7, 2010

2010 Share Market Floats - What Can Investors Look Forward To?

What will 2010 deliver to Australian stock market investors when it comes to new share floats? Hopefully, the worst of the global financial crisis is now behind us. After a fairly slow year in terms of the number and size of Initial Public Offerings, companies which had temporarily put their share float plans on the back burner may now be taking a second look at the market.

I think one of the reasons that 2009 was such a bad year for new share floats was the amount of competition for investment dollars. Investors could snap up a bargain pretty much anywhere they cared to look in the first half of 2009 (provided they were looking - some investors were too scared to go anywhere near the stock market given the massive falls an 2008, which continued into the early part of 2009).

Why would someone take the risk of investing in the Initial Public Offering of a company with no history as a publicly listed entity when there were businesses with long histories and strong track records up for grabs? The other area of competition was in capital raisings. With dozens of companies (many of them large and well-known) repairing their balance sheets by offering new stock to investors at a discount to already depressed prices, nobody was interested in the new guys.

There were only 40-odd new share floats in 2009. Of these, only 3 were of any substantial size -, Kathmandu and of course Myer.

So what are the upcoming share floats investors can look forward to in 2010? Well as usual, rumours abound. But here are a few of larger IPO's which may well get a guernsey this year.

Link Market Services

I have read in several places now this share registry service provider is planning an IPO. The business is currently owned by private equity firm Pacific Equity Partners. According to Christopher Webb who writes for The Age, the financials for Link Market Services don't look too flash though. If a Link Market Services share float is on the cards, it will be interesting to see how the sale is marketed to investors.

Ascendia Retail

Another private equity owned business, Ascendia Retail has reportedly engaged investment banks Goldman Sachs and UBS to advise on a possible stock market listing this year. Archer Capital own the group which operates the Rebel Sport and Amart Allsports retail chains. No doubt those involved in the Ascendia Retail share float will have been watching the fortunes of the Myer and Kathmandu IPO's very closely.

QR National (Queensland Rail)

Part of the Queensland Government's planned privatisation bonanza, the $7 billion QR National will list in the second half of 2010. The company will operate Queensland's coal and freight rail network. This is likely to be the largest Initial Private Offering of the year. Apparently priority in the QR National share float will be given to Queenslanders with staff reportedly receiving $1,000 worth of free shares and up to another $4,000 at a discount.

Other household names rumoured to be considering a public listing include cinema chain Hoyts, women's fashion retailer Witchery and Vacuum Cleaner specialist Godfreys. Along with the inevitable flood of speculative mining companies, investors in IPO's may well be spoilt for choice in 2010.

20 June 2010: It turns out the first major sharemarket float for 2010 is the Bilfinger Berger-owned Valemus Limited. The engineering and construction business will list in July. The share offer opened during the week. To find out more about it, read this post - Valemus Float - Valemus Share Offer Opens Today.