* Consumer electronics retailer's shares rise 3.6 percent on
* Listing comes into a market wary of private equity IPOs
* PE firm Anchorage cuts stake from 98 pct to 20 pct in IPO
By Jackie Range and Lincoln Feast
SYDNEY, Dec 4 Shares in Australian electronics
retailer Dick Smith Holdings Ltd debuted around their
offer price on Wednesday after its $315 million initial public
offering generated solid demand and a strong, swift return for
its private equity owners.
Dick Smith's listing comes at a busy time for the Australian
IPO market which remains wary of share offerings by private
equity-backed investors after some high-profile failures, most
notably department store company Myer Holdings Ltd.
Myer was listed by TPG Capital and Blum Capital in 2009 and has
not traded above its A$4.10 issue price.
But given skepticism about private equity exits, Dick
Smith's shares were priced for a fillip, said Sondal Bensan, an
investment analyst at BT Investment Management, which bought
shares in the IPO.
"I think that was all taken into account during the
bookbuild process," he said. "I think they priced it to ...
cancel out some of those potential risks."
Australian private equity firm Anchorage Capital Partners
cut its stake in Dick Smith to 20 percent from 98 percent
through the IPO. Anchorage brought the company from Woolworths
Ltd just over a year ago for an initial payment of A$20
million and subsequent payments totalling A$74 million.
Dick Smith shares opened at A$2.28 compared with its A$2.20
offer price and last traded at A$2.19, valuing the company at
Doubts have been raised about the company's fast turnaround.
Indeed, Simon Bonouvrie, a portfolio manager at Cadence Capital
said he wants to monitor the company's performance as a listed
business for several sets of results before making any
"I'm often skeptical of businesses that come out of private
equity, especially ones that are only owned by private equity
for a short period of time," he said.
"We've seen it in the past with Myer ... (that) had a lot of
enthusiasm pre the IPO but it turned out to be a poor
investment," Bonouvrie said.
PRIVATE EQUITY EYES EXITS
The Dick Smith sale comes as other private equity-backed
businesses are going public, encouraged by a share market
trading near five-year highs.
Australian insurer Cover-More Group is seeking to raise
A$521 million in an initial public offering, with Sydney-based
private equity firm Crescent Capital Partners cutting its
shareholding in the company to 13 percent from almost 83
Nine Entertainment Co Pty Ltd , one of
Australia's best-known media companies, is set to list shares on
Dec. 6, about a year after it avoided receivership with U.S.
private equity funds Oaktree Capital Group and Apollo
Global Management taking control in a more than $3
billion debt-for-equity swap.
Upping the tension, last month, KKR & Co called off
a planned A$500 million IPO of mining services firm Bis
Industries Ltd amid negative sentiment for companies exposed to
the resources sector.