Unsuccessful Valemus sale slams IPO market
The life of public floats for the rest of the year has been cast into uncertainty after volatile equity markets claimed the $1.3 billion offer of Bilfinger Berger's Valemus, Australia's second-biggest civil construction company.
Fund managers had approximated at the onset of 2010 that the year could have up to $10 billion in floats in Australia. However, their positive outlook has crumbled to worries about the coming back of a world financial crunch.
Bankers say Bilfinger Berger's move to abandon the plan is a major strike to the IPO market because it had been regarded as the best test of investor interest for new comers since Myer's unsatisfactory float last year.
According to Hugh Giddy, senior portfolio manager with Investors Mutual, "If the market continues to behave as it has recently we will have very few IPOs this year and brokers will be crying into their martinis because they will have less underwriting fees."
The German company said it was not willing to take an "undervalued price" for the recently named Valemus. Institutional investors even resisted at spending for shares at the lower end of the indicative range of $2.20 to $2.50 a share.
Valemus chief executive Peter Brecht said a rapid decline in equity markets had shaken investors formerly supporting the lower end of the range.
"This last week to 10 days has certainly put a lot of pressure on everyone's pricing, whereas perhaps a couple of weeks ago it might have got away."
According to him, the next possibility for a float would not be until early next year, although he stressed that "it's going to be very dependent on what the markets do".