* Two biggest Australian listings since 2010 coming to
* Sharemarket up just 1.9 pct in first half
* Investors growing wary of high prices
By Byron Kaye
SYDNEY, July 11 Australia's IPO window appears
to be narrowing as the sharemarket loses momentum and offerings
start to look overpriced, sapping demand for the combined $7
billion listings of hospital firm Healthscope Ltd and insurer
Australia had a record first half of new listings in the six
months to June 30, with $4.1 billion raised in initial public
offerings, or five times the amount sold in the same time last
But after a promising start to the year, the sharemarket has
lost momentum thanks to falling iron ore prices and a hit to
consumer confidence from an unexpectedly austere federal budget.
For the full first-half, stocks rose just 1.9 percent.
"There's a bit more caution than there was perhaps at the
end of last year, and that makes it more difficult to get IPOs
away successfully," AMP capital Investors chief investment
officer Shane Oliver said.
The uncertainty may mean demand for listings decided during
the IPO frenzy that defined the second quarter of 2014 is weaker
than anticipated, leading other companies to delay their
listings or sell assets privately. Firms that had been pursuing
an IPO to raise capital may consider increasing debt instead.
State governments with about A$100 billion of assets
earmarked for privatisation also will be watching nervously from
the wings, in particular the listing of $4 billion state-owned
insurer Medibank due before July next year.
"You're seeing more and more reports that people think the
equity market's getting expensive," said a principal at a Sydney
funds management firm, who does not plan to buy Healthscope
shares before its $2.5 billion listing on July 28. The listing
has a multiple of up to 23 times earnings.
"Healthscope could easily be a transaction where people find
out that they've paid a very high multiple and it doesn't trade
well," the principal said, requesting anonymity because of the
sensitivity of the matter.
Andrew Martin, principal at Alphinity Investment Management,
who has not yet decided whether to buy into Healthscope, noted
that several listings had been priced at the top end of vendors'
"The market's not that frothy that those things are going to
do well," he said.
In one of the weakest listings of the year so far, Macquarie
Group Ltd on Wednesday watched its latest sharemarket
debutant, children's online education company 3P Learning Ltd
, end its first day as a listed company with its shares
14 percent below their issue price.
Fund managers noted that while the company was profitable
and growing - neither of those a given for a tech company - it
was also priced with a multiple of up to 35 times net profit.
"It does have growth but not the level of growth that would
justify that multiple so we just couldn't rationalise paying
that price for that business," Platypus Asset Management chief
investment officer Donald Williams said.
"We didn't participate in it (and) the main reason was we
thought it was overvalued."
Macquarie sold its 15 percent stake in the company as part
of the listing as well as running the IPO.
Another recent Macquarie listing, clothes company PAS Group
Ltd, is currently sitting 12 percent below the issue
price determined by the investment bank, which sold down its 17
percent stake as part of the listing.
Macquarie cancelled two other listings earlier in the year,
online retailer OzSale and Sterling Early Education, after
investors expressed doubts. Macquarie subsequently listed OzSale
in London as MySale Group PLC, where a month after
listing its shares are 6 percent below their issue price.
UBS pulled a listing of hotel company Mantra Group
Ltd in March when investors balked at the price, then
went ahead with the IPO two months later at the same price of
A$1.80. The stock was at A$1.84 on Friday.
"Later in the year might be better timing than sooner for
(Healthscope and Medibank)," AMP's Oliver said.
"By year-end some of the concerns about the Australian
economy, around the budget and confidence, might have started to
(Reporting by Byron Kaye; Additional reporting by Thuy Ong;
Editing by Stephen Coates)