* Government announced A$4 bln Medibank sale on Wednesday
* Mantra Hotels ditches A$500 bln IPO on same day
* OzSale, Stirling Early Education also shelve IPOs
* IPO fever gives way after recent listings' mixed fortunes
(Recasts, adds no comment from Mantra Hotels, OzSale)
By Byron Kaye
SYDNEY, March 27 The Australian government's
planned multibillion-dollar sale of state health insurer
Medibank Private could not have come at a more challenging time,
with the shelving of three sales worth over A$1 billion ($922.45
million) in recent weeks.
The window for huge initial public offerings in Australia is
starting to narrow, with the IPO fever last year leading to many
shares being priced too high, senior investors say.
Australia's IPO drought of some five years ended in 2013
with a six-fold on-year increase in the value of sales, while
the stock index built on a 2012 recovery with a 15 percent rise.
The shares of several large IPOs, however, have since languished
below their sale prices.
While the government announced the A$4 billion sale of
Medibank on Wednesday, Mantra Hotels was abandoning its IPO
after scaring away investors with its high price. A similar fate
recently befell retailer OzSale and Stirling Early Education.
"Last year there was a wave of IPOs and investors were
buying almost anything," said Fort Street Advisers principal
Richard Hunt. "In the new year, investors seem to be more
selective about what businesses they want to invest in and
what's appropriate in terms of structure and pricing."
Australia's biggest IPO of the year so far looked set to be
the A$500 million sale of Mantra Hotels. The country's
second-biggest hotel operator shelved the plan late on Wednesday
as not enough investors were willing to pay the asking price, a
person close to the sale told Reuters.
Online discount retailer OzSale had been preparing a A$500
million IPO for over a year but has also called off the idea,
another person told Reuters on Thursday.
Mantra Hotels and OzSales could not be immediately reached
Childcare centre owner Stirling on March 17 cancelled its
A$200 million IPO after likewise failing to attract enough
investors. A week later, rival G8 Education Ltd said it
would buy 91 Stirling centres for A$228 million.
The mixed fortunes of IPOs completed late last year and
earlier this year appear to be influencing market sentiment,
senior investors said.
Shares of television station Nine Entertainment Co
traded below their December IPO price for their first month
after listing, whereas packaging company Pact Group Holdings Ltd
is yet to trade above its December issue price.
This year's largest IPO to date of car rental company SG
Fleet Group Ltd is also yet to trouble its issue price.
"There were a lot of floats late last year and they had a
mixed reception," said AMP Capital head of investment and chief
economist Shane Oliver.
"That would have had some impact, and more recently the
share markets globally have been quite jittery."
IG market strategist Evan Lucas also believed appetite for
IPOs was selective, with companies booking reliable or
quick-growing profit still attractive.
On the other hand, companies such as Mantra Hotels that are
heavily involved in real estate, for instance, could suffer
reduced earnings growth while Australia's mining boom slows,
"You've got to concentrate on who it was and what they were
selling, rather than saying the whole IPO market is falling in a
heap," Lucas said.
(Editing by Christopher Cushing)