* Pact Group's shares fall 12.6 pct from IPO price
* GDI Property Group shares lose 11.5 pct
* Host of new issues in pipeline in 2014
By Jackie Range
SYDNEY, Dec 17 Disappointing debuts on Tuesday
from Australia's biggest initial public offering this year, Pact
Group Holdings Ltd, and a property investment firm cast
a shadow over prospects for the nation's bulging IPO pipeline in
Investor fatigue looks set to put pressure on a rash of
deals to come, and companies may be forced to price their IPOs
with scope for shares to rise and an eye on how on long the
window for new listings will stay open.
"I'm afraid the market's got choked on the new issue
syndrome," said Stuart Smith, a senior client adviser at Bell
Potter Securities Limited in Brisbane.
"I haven't participated in any and my clients are happy not
to," Smith said.
Shares in packaging firm Pact fell 12.6 percent from their
IPO price to finish their first day of trade at A$3.32, after
the company raised A$649 million ($581.54 million). Property
investment manager GDI Property Group Pty Ltd slumped
11.5 percent from its IPO price to close at A$0.89, after
raising around A$310 million. The broader market was 0.27
The two lacklustre debuts throw into question whether
investors, wounded by poor performances, will be prepared to
plough more money into new companies at a busy time for IPOs in
They come after other new listings have also performed
badly. Online comparison company iSelect Ltd's shares
have only touched their IPO price of A$1.85 on one day since
listing in June, and closed on Tuesday at A$1.33.
Nine Entertainment Co Holdings Ltd, the second
biggest IPO in Australia this year, debuted earlier this month
and is also trading below its offer price of A$2.05, with shares
closing at A$1.92.
Around $6 billion is expected to be raised this year, with
predictions of at least a further $5.5 billion in 2014.
The raft of deals to come include travel insurance and
medical assistance provider Cover-More Group Ltd,
which plans to start trading on the Australian stock exchange on
Thursday after raising A$521 million in the nation's third
biggest IPO this year.
Next year a host of companies are expected to list,
including government-owned insurer Medibank Private and
healthcare business The Healthscope Group, owned by private
equity funds The Carlyle Group and TPG Capital
Management, according to a banking source.
Facilities management outfit Spotless Group, owned by
Australian private equity fund Pacific Equity Partners, is also
expected to go public. The long-delayed $3 billion IPO of Hong
Kong utility CLP Holdings Ltd's Australian unit,
EnergyAustralia, may also take place, bankers say.
But some investors are eschewing new issues, believing they
do not offer value and preferring to focus on stocks that are
"We've got enough good stocks in the market to buy," Smith
at Bell Potter Securities Limited.
PRESSURE FOR GOOD DEALS
Deals that disappoint investors pile pressure on companies
still to come to market to offer investors a good deal by
pricing their IPOs on the cheap side.
"I think it definitely puts the pressure on, somewhat, on
the price that's likely to be achieved," said Akshay Chopra, an
analyst at Karara Capital in Melbourne.
And amid the risk of the Federal Reserve calling an end to
easy money in the United States, if companies cannot get the
deal they want, they might opt not to list at all.
"With tapering amongst other things, the outlook for equity
markets might be different again next year ... then that in turn
may also influence the decision for companies whether they want
to go to IPO or not," Chopra said.