UPDATE 2-Australian retailer Kathmandu plans $349 mln IPO

* Kathmandu to raise up to A$380 mln in IPO

* Offer being sold at 13-15 times 2010 earnings (Adds company confirmation, fund manager comments)

By Denny Thomas

SYDNEY, Oct 19 (Reuters) - Australasian outdoor-gear retailer Kathmandu launched a $349 million initial public share offer on Monday, pitching the offer at a level that suggests private-equity exits need to be finely priced to succeed.

Kathmandu's move follows the launch of a A$2.3 billion ($2.1 billion) IPO by Myer, Australia's top department store chain, and comes ahead of the flotation by another retailer, Ascendia, in a gush of new equity being evaluated by skeptical investors.

Kathmandu, which Goldman Sachs and Quadrant bought for NZ$275 million ($204 million) in 2006, is offering its shares to the market at around 13-15 times its forecast 2010 earnings, a discount to the Myer offer at around 14-17 times and in line with the overall market.

Steve Robinson, a fund manager with Alleron Investment Management, said the Kathmandu offer price of A$1.65-A$1.90 each looked reasonable, given its relatively high profit margins and its projected annual earnings growth of 15 percent.

Kathmandu, which will have a market capitilisation of up to A$380 million after the IPO, boasts of a 64 percent gross profit margin.

"That's is pretty high margin. The reason for that is Kathmandu is more vertically integrated," said Steve Robinson, a fund manager with Alleron Investment Management.

Some recent private-equity exits such Board Longyear Ltd (BLY.AX) and Emeco Holdings Ltd (EHL.AX) have performed poorly after listing, making investors wary of private-equity floats.

Founded in New Zealand in 1987 by mountaineer Jan Cameron, Kathmandu has 82 stores in Australia, New Zealand and the UK selling everything from tents to trekking boots and backpacks.

An analyst who declined to be identified also said the pricing looked fair, though noted that Kathmandu faced serious discount rivals, such as Super Cheap Auto Group's (SUL.AX) Boating Camping Fishing arm, which has been cutting prices.

"It's still a very good price," said the analyst with a fund manager, who declined to be named as the fund had yet to decide whether it was going to buy into the float.

Goldman Sachs and Quadrant plan to retain 0-15 percent of Kathmandu, which is seeking to add 12 more stores in 2010.

Australia's benchmark S&P/ASX 200 share index .AXJO has rallied about 51 percent from a five-year low reached in March on expectations of economic recovery, with retailers David Jones (DJS.AX) and JB Hi-Fi Ltd (JBH.AX) outperforming the market.

Bankers estimate Australian companies will raise about A$10 billion through IPOs in the next 12 months, if all goes well with the float of Myer.

"These two offers are pitched at different investor audiences," one of the sources said. "Kathmandu is going to small-cap investors, while Myer is clearly for big caps."

Kathmandu is also planning to list in New Zealand, offering investors there NZ$2.01-NZ$2.32 with a total of about 200 million shares on offer in the overall IPO.

Goldman Sachs JBWere and Macquarie Group Ltd (MQG.AX) are the lead managers for Kathmandu's offer. (Editing by Mark Bendeich and Lincoln Feast) ($1=1.091 Australian Dollar) ((denny.thomas@reuters.com; +61 2 9373 1812; Reuters Messaging: denny.thomas.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) ($1=1.349 New Zealand Dollar)