Time for Nine Entertainment (NEC) to hit the boards today in its float after the stellar surge by credit reporting group Veda (VED) yesterday and a small gain for retailer Dick Smith (DSH) after Wednesday’s weak start to life as a listed company.
The overall market is expected to start weakly today and a repeat of yesterday’s slide will make for a very tough birth for Nine as a listed company.
Nine will list with a price of $2.05 and hopes that it, like Veda, can shake off the impact of a weak day for the wider market.
Nine will have a valuation of $1.93 billion, and it’s been deliberately underpriced to try and give it some listing oomph today.
After yesterday’s big afternoon sell-off, it could be a very rough entry for Nine today.
Veda listed with an opening premium of nearly 50% in a market that was down at the start of trading and all day.
It was the 85th float this year (more than two a week) and one of the more successful on its first day.
The shares closed on $1.75, up 40% and well above the float price of $1.25, and an indication the private equity seller and its advisers left hundreds of millions of dollars of value on the table, which was transferred to shareholders in the float.
Given that the market fell sharply in the afternoon, Veda shares remains remarkably solid.
It was a much stronger opening than Dick Smith, which didn’t move from its $2.20 issue price by the close of trade (going above and below the price during the day which saw the wider market rebound in the afternoon).
Yesterday, in the weaker market, Dick Smith shares edged up to $2.24, a gain of just over 1.8%.
Veda provides financial services including credit scoring to its retail and business customers and investors wanted to get on board for one reason – the start of comprehensive credit reporting next March (as opposed to the more negative type now used).
Veda Group boss Nerida Caesar said in media reports yesterday that there were plenty of future acquisition opportunities for the company.
The company has made around seven purchases since being taken private by Pacific Equity Partners and Merrill Lynch Global Private Equity for $814 million in 2007.
The float helped Veda hit a market capitalisation of $1.05 billion, after the company issued 272.8 million shares at $1.25 apiece. The value is now closer to $1.6 billion.
Fund managers that backed the float include wealth management giants Perpetual and Caledonia.
PEP will retain a 63.5% stake in Veda, which over time will have to be sold down if it is not to start depressing the share price, as the overhangs in Dick Smith and Nine Entertainment are likely to do next year.
Other financial services companies that have listed this year include insurance broking group Steadfast, which has seen a sharp rise in the value of its shares, and the Melbourne-based private health insurance comparison website iSelect, which suffered a dismal debut in June with weaker profits and concerns about disclosure, which drew an inquiry from ASIC.
