Ambitious floats fail to fire up enough investors

TWO failed floats in two weeks, including one touted as the biggest of the year, have fund managers sceptical that forthcoming offerings will achieve their share pricing aims.

Investment banks are working on new listings for at least four private equityowned companies hoping to raise a combined $2 billion. The first will be Asian-focused online real estate listings business PropertyGuru, which prices shares worth up to $380 million this week.

Other initial public offerings in the works include Retail Zoo, owner of the Boost Juice drink chain, the nonbank lender Pepper Home Loans and industrial equipment hire

Onsite Rental.

“These IPOs are trying to cash in on high equity market valuations at the moment and, sadly, investors are just not ready to pay such multiples for new businesses,” Tribeca Investment Partners portfolio manager Jun Bei Liu said.

Consumer lender Latitude Financial’s planned $1 billion business

IPO, its second attempt at a listing in little more than a year, was pulled last week after the offer failed to attract sufficient investor interest.

The company, led by former Australia Post chief Ahmed Fahour, first tried to list at 13.9 times its forecast 2020 earnings, only to cut that to 11 times. That was still above the average multiple of 10.6 for competitor FlexiGroup.

A float for MPC Kinetic, a coal seam gas services firm, also fell through earlier this month after buyers could not be found at desired prices.

Companies raised $416 million from IPOs in the year to September, the lowest amount for the period since 2012, according to financial market data provider Refinitiv.

That is despite a 17.7 per cent jump for the stockmarket this year on record low interest rates.

“It would be nice to have a little bit more of confidence in relation to some of these IPOs going through,” one banker said. The banker did note, however, the recent success of Home Consortium property group, which raised $325 million.