UPDATE 1-Kathmandu's Australia shares climb on debut

* Shares debut up 4.7 percent, broader market down 0.8 pct

* Seen as sign that IPOs need to be priced carefully (Adds fund manager, investor comments)

By Victoria Thieberger

MELBOURNE, Nov 13 (Reuters) - Shares in Australasian retailer Kathmandu Holdings Ltd (KMD.AX) climbed 7 percent on their first day of trade on Friday, in a sign that IPOs can succeed in fragile markets if the pricing is set sensitively.

Shares in the outdoor clothing retailer opened at A$1.775, a 4.7 percent premium to the IPO price of A$1.70, and rose to a high of A$1.82. The deal raised A$340 million ($314 million).

Its New Zealand shares opened at NZ$2.22 versus an offer price of NZ$2.13.

Kathmandu's positive debut contrasted with last week's disappointing $2 billion listing of department store chain Myer Holdings Ltd (MYR.AX), which slumped 9 percent on its first day and is still trading below its listing price.

"It shows the market is extremely sensitive to the pricing and valuation," said Fortis Investment Partners portfolio manager Martin Duncan.

Like Myer, Kathmandu was priced at the bottom of the indicative range. Kathmandu said earlier in the week it could have priced the IPO higher but wanted to ensure strong demand.

Myer, meanwhile, ran into concerns that its price was a little high given the possibility of slowing sales at department stores.

Kathmandu was priced around 13 times forecast 2010 earnings, compared with Myer's 15.1 times.

Australian retailers have benefited from a milder than expected economic downturn, but could well be hit by the resulting hikes in official interest rates, which could dampen demand in the crucial Christmas trading period.

At the same time, IPOs across Asia have faced increased investor fatigue, suggesting the window may have closed for aggressively priced deals.

This week, Morgan Stanley's Australian real estate unit, Investa Property Group, shelved plans for a A$1 billion float of some office assets, saying there was a "disconnect" in the price investors were willing to pay. [ID:nSYD469989]

Kathmandu's private equity owners, Goldman Sachs JB Were and Quadrant Private Equity, sold their entire stake, in the second large private equity exit in Australia in two weeks after Myer.

An investor with Quadrant, which made 3.5 times its investment in Kathmandu, told Reuters a wide range of private equity managers were planning sales, but they were more likely to favour trade sales over IPOs given the fickleness of markets.

Jon Schahinger, managing director of listed investment company ING Private Equity Access Ltd (IPE.AX), which has A$126 million committed to private equity funds, said private equity managers would follow a dual-track process.

"Even though an IPO may be contemplated, if there are good trade buyers that can see synergies with their business it is cleaner and simpler to go down that route than go through the hassle of an IPO," Schahinger said ahead of Friday's listing.

Founded by mountaineer Jan Cameron in New Zealand in 1987, Kathmandu has 82 stores in Australia, New Zealand and the UK, selling everything from tents to clothing and backpacks. Kathmandu had also faced headwinds from negative comments by Cameron, who revealed plans during the IPO process to launch a cut-price competitor. (editing by Jonathan Standing)