Initial public offerings have proven to be the flavour of 2005, with a spike in value to a predicted tally of $15.3 billion for the year, a report released by Deloitte revealed.
While the total number of IPOs has risen by just 10 per cent to 187, the value of new listings was expected to be 63 per cent higher this year than last year. In 2004, $9.4 billion was raised in IPOs.
Steve Woosnam, Deloitte corporate finance partner, said the key was the size of some of the floats. In the December quarter alone, three IPOs had raised in excess of $1.5 billion. The three biggest floats of the year, Spark Infrastructure, Goodman Fielder and SP AusNet, are all expected to list this month, and should raise more than $5.1 billion in total.
“You don’t get too many of those, and we’ve got three in a quarter,” Woosnam said. Basically, the bullish market had encouraged people to sell, he said.
There was a continued flood of money from superannuation funds, and it was possible that the big companies did not want to hold off until next year when they might have to compete for shareholders against Telstra’s third tranche sale of shares.
Although he was not big on predictions, Woosnam said the market had shown no sign of slowing in the last couple of months and there was nothing to suggest the market would not remain strong for some time.
The Sydney Morning Herald reported that PricewaterhouseCoopers’ preliminary report on the market suggested solid returns generated by new listings had encouraged others to list. The report, which tracked companies that floated up until 30 November, indicated new listings were trading at their highest average share price premiums in six years.
Companies with a market capitalisation of $100 million or more were trading at an average 24 per cent premium on their issue price and small floats, capped under $100 million, achieved an average 17 per cent premium to their issue price.
Some of the more interesting deals of the year included the $2.17 billion IPO and listing of Tattersall’s, which Clayton Utz acted on. Herbert Geer & Rundle advised on the company’s restructure in the lead up to the float. Clayton Utz also acted for China Light & Power on its $2.2 billion acquisition of Singapore Power International’s Australian merchant business.
Blake Dawson Waldron acted on BHP Billiton’s $9.2 billion acquisition of WMC Resources — the largest takeover offer ever for an Australian company. The firm also acted for Ramsay Healthcare on its $1.4 billion acquisition of Affinity Health.
Freehills was involved in a number of heavyweight securitisations, acting for Members Equity on its eight global bond issues under the SMHL program and for Allco Finance Group on the establishment of Allco Max Securities and Mortgage Trust.
The firm acted on both the SP AusNet and Goodman Fielder floats and was appointed to act for the Commonwealth Government on T3, while Mallesons Stephen Jaques will act for Telstra.
Blake Dawson Waldron acted for San Miguel Corporation on its successful $1.9 billion takeover of National Foods, the largest in Australia’s dairy industry, while Corrs Chambers Westgarth acted for Foster’s on its takeover of Southcorp, represented by Allens Arthur Robinson.