So much for all that ‘optimism" and confidence in the end of year/start of year stories in the various newspapers and on the web about the Australian stockmarket.
At the first sign of a few concerns (mainly from the US) and despite the solid profit upgrade from the Commonwealth Bank on Friday, bang goes a high profile IPO with Archer Capital ‘slowing’ the IPO of Rebel Group.
The media reports yesterday suggested that Archer’s claimed $800 million valuation might have been a bit rich.
A bit greedy more likely.
Archer has been pushing towards a float or refloat, (it bought Rebel more than two years ago when it was still listed, but controlled by Gerry Harvey’s Harvey Norman), since last November as it hoped to catch the wave that it thought the IPOs of Myer and Kathmandu would create.
Far from it: Myer has failed to trade at or above its $4.10 float price and traded around $3.55 yesterday.
Hardly a ringing endorsement for the IPO pricing, which even more seems to have been set to benefit the departing private equity owners than the incoming shareholders.
Kathmandu hovered around its $1.70 issue price last month before easing. It traded around $1.615 yesterday.
Both Myer and Kathmandu were down on a day the overall market rebounded into the black in afternoon trading.
Part of the justification in some articles was the "poor" Christmas sales that some chains are supposed to have seen.
After the surprise 1.4% jump in November’s retail sales, anything slower would be ‘disappointing’ to some.
But the decision smacks of nervousness at Archer at the way the Myer and Kathmandu floats have been mauled.
There have also been some anonymous comments from fund managers about the richness of the Myer pricing and these have no doubt been repeated to Archer and its advisers.
Now there’s talk Archer’s decision could delay other IPOs planned for the retail sector, such as Pacific Equity Partners’ REDGroup Retail which owns Australia’s two largest bookstore chains, Borders and Angus & Robertson.
Books are hardly flavour of the month among many investors with all the talk about e-readers, digital books, smart phones being given the capability to be e-readers and other new tech developments in this area.
So that is hardly going to ignite investor demand.
Archer hired Goldman Sachs, Bank of America/Merrill Lynch and UBS last October to advise on an IPO as Myer and Kathmandu moved to list.
Rebel Group includes the Rebel Sport and A-Mart All Sports sporting goods chains.
It was re-named Ascendia Retail, now it’s back to Rebel Group, which is a far better name for investors.
Media reports have put the value of the group at up to $800 million and said it had planned to list by March.
Archer Capital backed a management buy-out of A-Mart in 2004, and added Rebel Sport in 2007.
The two chains have more than 150 stores around the country with annual sales of $670 million.
