Iffy Start for Macquarie’s Keypath IPO

No quick flip for participants in the listing yesterday on the ASX of US-based Keypath Education.

The shares listed at $3.71, made a brief run up to $3.73, then retreated to touch a low of $3.40 before closing at $3.55, down 4% on its first day.

The fall to $3.40 was a nasty drop of 8.4% and was accompanies by heavy selling of nearly 5.5 million shares in the online learning company.

New floats often see heavy selling, but if investors see upside, they hold back.

It’s the latest Macquarie-backed listing to hit the boards and there’s a feeling that after the boom and bust of the Nuix float last December – another Macquarie effort – that tech-related stocks are to be avoided.

Not helping the success of the listing was pre-float publicity about Keypath on Wednesday in the Australian Financial Review which picked up different US-Australian dollar currency conversion figures in a document sent to investors ahead of the opening of the float by Macquarie and those in the company’s prospectus.

The history of Nuix – a big listing at $5.31 a share, the shares running up to more than $11 in January then crashing on two revenue and earnings downgrades, governance issues, disputes with a former CEO, unexplained issues about how a former chairman got a swag of shares for little outlay.

That and other claims in media investigations into Nuix have sparked interest at ASIC, the corporate regulator.

Nuix shares hit a new low of $2.67 yesterday, down another 2.5%, so investors are still not happy with that one from Macquarie (Macquarie still hold 30% of Nuix). Wednesday’s close is in fact an 80% drop from the all-time high of $11.855 in January.

Keypath raised $212 million in its float and was valued at $772.5 million at the $3.71 listing price.

It was started in 2014, is yet to turn a profit and its prospectus is also tipping losses in 2021 and 2022.

Normally that wouldn’t be such a worry for tech interested investors who understand that it’s all about growth, with the hope revenue and earnings will grow once the hard yards are done.

But the travails of Nuix, plus poor performances and downgrades from other tech favs – Afterpay, Nearmap and Appen spring to mind – seem to have made tech-interested investors more cautious.

The whole sector now seems to be on suspicion in the minds of investors until some upgrades or surprises on the upside change minds.


About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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