With the year now well underway, it's time to turn our attention to what the IPO market might throw our way in 2011. In terms of the number of new issues, last year was an improvement on 2009. Will 2011 be a better year again for investors in Australian share floats?
2010 saw 96 new listings worth a total of $7.5 billion. The monster float of the year was QR National. And despite some investor doubt in the run-up to the QRN share offer, the share price has actually performed fairly well. Shares are trading at $2.80 as I write this, which is a reasonable premium to the $2.45 paid by retail investors. Of course such short term price movement is likely to be driven more by sentiment than by fundamentals. The real test for QR National will be the next couple of years operating results.
Looking ahead, the first major float of 2011 is rumoured to be Nine Entertainment Co. This IPO could be worth as much as $5 billion. Nine Entertainment Co is the new name for the PBL Media assets bought by private equity CVC Capital Partners in 2007.
Here is the blurb from the home page of Nine Entertainment Co website:
We are Australia's most diversified entertainment company. Our assets include the Nine Network Australia, ACP Magazines, Ticketek, Acer Arena and majority interests in carsales.com, a 50% interest in ninemsn as well as interests in the Australian News Channel (Sky News).
While it looks like there are some quality businesses within the group, the attractiveness of this float will depend upon pricing and the debt levels held by the entity which eventually lists.
Another interesting share float in 2011 might be Intrepid Travel. Intrepid Travel provides adventure travel services. While the company is not as large as some of the other floats which might come along this year, it does have quite a strong brand. The business is was started 21 years ago. It made a pre-tax profit of $10 million from revenues of about $120 million.
Ascendia Retail is another name which keeps doing the rounds. This group contains Rebel Sport and was rumoured to be a starter for an IPO last year. However, given the negative sentiment toward listed retail companies right now, owner Archer Capital might be inclined to hold on until more positive signs emerge from this sector of the market. It's worth noting that Archer also owns MYOB and iNova Pharmaceuticals, both of which I presume it would be looking to sell out of at some stage.
Other retailers currently held by private equity firms which may eventually come back onto the market include Repco (owned by Unitas Capital) and Colorado Group (owned by Affinity Equity Partners) although according to this article in The Australian, Colorado may be some way off being in a position for a public offering.
Two other companies rumoured to be considering their IPO options are Link Market Services KKR's Seven Media Group, although these may end up happening in 2012 or beyond.