RPT-Australian IPO flow solid for 2008, but few big ones

(Repeats item first sent Dec 14)

By Sonali Paul

MELBOURNE, Dec 14 (Reuters) - Investment bankers expect a steady flow of smaller initial public offerings in Australia next year, with the potential float of a New South Wales power company the only deal likely to match this year's biggest listing.

Australians invested A$8.9 billion in IPOs this year, down from a five-year annual average of A$10 billion. The year's biggest issue was the A$1.9 billion listing of U.S.-based drilling services group Boart Longyear Ltd (BLY.AX).

While there is plenty of cash to be invested and a raft of mining companies, retailers, investment funds and toll-road operators that could come to market, bankers do not agree on whether more money will be raised next year.

"We expect the market to be much stronger than it was in 2007," said Ghazaleh Lyari, Citi's (C.N) head of IPO origination in Australia.

With A$57 billion in surplus cash in the market and good supply of companies ripe for the market, she said the only factor that could stall IPOs would be market volatility, driven by the global credit squeeze.

"High volatility is never good for the IPO market, but it's never going to be a situation where the market is completely shut. All it means is that the windows of opportunity are going to be shorter and possibly less frequent," she said.

The head of equity capital markets at Credit Suisse, Campbell Lobb, was pessimistic about an increase in IPO value next year.

"If the market in the new year is like it is now, I believe next year we'll see fewer IPOs," Lobb said.

POOR PERFORMANCE

For companies directly affected by the global credit crunch or U.S. housing woes, like financial services firms, attracting investors is tough.

Wealth management firm Storm Financial blamed market volatility when it scrapped plans last week for a A$160 million IPO.

But miners, riding a commodities boom fuelled by demand from China, have fared better.

The latest miner to list, Northern Iron Ltd (NFE.AX), rose as much as 24 percent above its issue price in its first two days of trading this week.

"It really depends what sector you're in. If it's in a sector where investors have less of an appetite, the pricing's going to be more challenging," said Wayne Kent, head of equity capital markets at Macquarie Bank, which led the sale of Boart and Northern Iron.