Business

Tuesday November 3, 2009

Myer shares slide on debut


MELBOURNE: Shares in department store chain Myer Holdings Ltd fell 5.4% on their debut in Australia’s biggest public float in two years, a negative sign for other retailers with IPOs waiting in the wings.

The shares opened at A$3.88, compared with the issue price of A$4.10, and were at A$3.91 at 0111 GMT, hit by the global slide in stock markets that sent Australia’s benchmark index down 2.1%.

Shares in Myer’s main rival, upmarket department store chain David Jones Ltd were down 1.5%.

The price had already been pushed to the bottom end of an indicative range in the A$2.2bil (US$2bil) float by market turbulence over the past week and fund managers’ disdain for what was seen by some as a rich valuation. — Reuters

Myer’s float was widely seen as a test for a rush of private equity firms wanting to exit their holdings in coming months.

Camping and outdoor clothing chain Kathmandu has launched a A$374.9mil IPO, due to start trading on Nov 18, and Ascendia, owner of the Rebel Sports sporting goods chain, aims to launch in the new year.

Myer’s private equity owners TPG Capital and Blum Capital sold out their entire stake in the IPO.

Some investors have been wary of companies floated by private equity firms, given some poor performances, such as drilling services company Boart Longyear Ltd, which trades at less than a quarter of its listing price.

Myer’s A$4.10 offer price reflected a price-to-earnings ratio of 15.1, below that of David Jones at 17 times forecast earnings.

Macquarie Capital, Goldman Sachs and Credit Suisse were joint lead managers to the offer.

Myer has 65 stores across Australia, nearly double David Jones’ 36 stores, and has some 3 million shoppers a week through its doors.

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