Trade Me float bookbuild underway

New shares in online auction company Trade Me are being priced through a bookbuild being run today. Photo / Brett Phibbs

A bookbuild designed to set allocations and pricing for the partial float online auction company Trade Me is under way.

The prospectus for the float is expected to be registered on Wednesday.

BusinessDesk understands that a bookbuild began this morning at 9am that involves both brokers and institutions. The bookbuild will run all of today and until tomorrow morning. It sets broker and institutional allocations and the price for the float. There is no public pool.

A price range of $2.30 to $2.70 a share has been indicated in early marketing, with 135 million shares offered for sale, Businessday, a Fairfax publication has reported. This would raise between $310 million and $365 million for Trade Me's owner Fairfax Media.

Sources expect the shares to be listed in both Australia and New Zealand though this has not been finally confirmed.

Fairfax said in August that it intended to sell between 30 per cent and 35 per cent of Trade Me via an initial public offering.

Fund managers have seen pre-float document suggesting a valuation of more than $1 billion for the whole business.

The top end of the valuation range for the float is around 16 times projected net profit for 2012. Some fund manager regard this as expensive, while others say it is in the ballpark for a digital business.

The process of the float is being managed around the New Zealand election on November 26 and there is a desire to get the float away before the summer holidays.

Fairfax acquired Trade Me for $750 million in 2006. Founder Sam Morgan is on the Fairfax Media board and former All Blacks captain David Kirk, a former Fairfax chief executive, is set to chair the demerged company.

Trade Me Holdings Ltd and Fairfax Digital Assets NZ Ltd and Fairfax Digital Holdings NZ Ltd have been reserved as names at the Companies Office.

Shares in Fairfax haven't been halted for the bookbuild, and last traded at 94 Australian cents on the ASX. The stock has shed almost a third of its value this year, valuing it at A$2.21 billion by market capitalisation, and is rated an average 'outperform' by 13 analysts, according to Reuters.