Floats: Two Biggies, Lot’s Of Tiddlers, No Real Action

The multi-billion-dollar listings of QR National and Westfield Retail Trust on the Australian share market should be ignored in looking what was a weak financial year for public floats.

On the bare figures, it was a good year: a total of 123 companies listed on the share market in the year to June 30.

The IPOs raised $7.6 billion, according to the latest Deloitte Corporate Finance IPO survey.

But only nine happened in the second half of the year and several were pulled, most notably the $545 million offer planned for mining services group, Barminco.

The biggest second half issue was container services group, Royal Wolf Holdings' $91.5 million offering.

Issuance is down 35% on the same period last year, according to Thomson Reuters’ data.

The full year figures was up from the 63 floats in the 2009-10 financial year (which raised $4 billion).

However, in the three financial years before the global financial crisis hit in late 2008, the average number of IPOs in a financial year was 197, raising $9.9 billion.

The 2010-11 figures were badly skewed by giant float of rail operator QR National in late November, which raised $4.05 billion.

That raised over 50% of the year's amount, with another $2.01 billion raised by the split and reshuffle in the Westfield empire which saw 50% of the group's Australian and NZ shopping malls sold to existing investors.

Westfield Retail Trust, listed in December, so by the end of the first half of the financial year, over $6 billion had been raised in just two issues.

The number of floats dried up in the second half of the financial year, despite a fairly solid first quarter.

Deloitte Corporate Finance partner Steve Woosnam told AAP yesterday that:

"The successful listing of Queensland Rail in particular raised expectations for the IPO market in the new year, however overall, the market has failed to live up to these expectations," he said.

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Many businesses opted in favour of a trade sale, rather than a public listing, Mr Woosnam said.

"The equity market simply couldn't match the valuation expectations of vendors or those achieved through private sales," he said.

Deloittes said the share market performance of the companies that joined the market in 2010-11 was better than the previous year.

Only one in three companies saw their share price rise after listing in 2009-10, but in the year just completed, that number rose to just over 42%.

Nine of the top 10 performing floats in the year were resource-related companies, according to Deloitte's research.

No surprise there, the majority of the top 10 best performing stocks in 2010-11 were resources stocks.

And now there's a new possible float to assess.

The private equity owners of Collins Food International (the country's biggest Kentucky Fried and Sizzler operator with 145 outlets in total) is looking to raise around $238 million with an IPO being proposed.

That's if the market doesn't force that to be pulled or sold to another private equity group.

One IPO that didn't make it to market in 2010-11 was Quick Service Restaurants Holdings – the group behind the Red Rooster, Oporto and Chicken Treat food chains.

It was sold by its private equity owners to another PE group for around $450 million.

Quadrant, the seller, said the certainty of a trade sale was more attractive than a float.

The Australian market was up around 7% in 2010-11 with 2% of that happening in the first half and the rest in the six months to June (but the June quarter saw a weak performance overall).

The ASX said yesterday that there were 160 new floats that raised $29.3 billion, 157% up on the previous year's $11.4 billion, which I know is different toe the Deloitte's figures.

However secondary raisings by already listed companies halved to $33 billion, with overall capital raised declining 18% in the year to June.