"A remarkable week." That was how NZX chief executive Tim Bennett, addressing the Gentrack listing event in Auckland on Wednesday, described what has been an eventful few days on the market.
Two companies, software developers Serko and Gentrack, made their stock exchange debuts and another, equipment rental firm Hirepool, shelved its listing plans indefinitely. Tuesday got off to a shaky start when Hirepool confirmed it had withdrawn its offer - which was set to be the second-biggest NZX listing this year - after institutional investors rejected the $1.10 to $1.50 indicative price range set by its private equity majority owner, Australia's Next Capital.
Later that morning corporate travel booking software developer Serko celebrated its debut as a public company with the striking of a large, and rather loud, gong.
Its shares initially rose, but then quickly plunged and ended up closing almost 14 per cent below the $1.10 offer price at 95c.
Such a fall could suggest the offer pricing was a bit steep, but to be fair Serko picked a difficult day to list. The canning of the Hirepool offer may have caused some investors to assume appetite for new listings was waning.
Serko is also a growth-focused, loss-making business and similar stocks including online software developers Xero and GeoOP, as well as bladder cancer test provider Pacific Edge, were also falling on Tuesday. Xero fell to a nine-month low of $23 soon after Serko listed and then rebounded to close up slightly at $25.92. Its shares, which hit a record high of $44.98 in March, closed up 28c yesterday at $25.90. Serko stock rebounded on Wednesday and yesterday, closing at $1.05 last night, but still below the $1.10 issue price.
Speaking at Serko's listing event on Tuesday, chief executive Darrin Grafton said the offer had attracted many "mum and dad" investors, with more than 900 shareholders on the register. Grafton wants the firm to be New Zealand's "next tech story" - and maybe it will be. It seems incredible but in early 2009 Xero shares, which listed in 2007 at $1, were trading for less than 70c.
Gentrack chief executive James Docking admits he was feeling a little nervous on Tuesday as he watched Serko's share price dive. But shares in the Auckland-based developer of management software used by water and energy utilities, as well as airports, had a much better first day of trading, closing at $2.49 on Wednesday, a 3.7 per cent premium to the $2.40 offer price. Gentrack shares closed up 4c yesterday at $2.53.
"Obviously [the fall in Serko's share price] made me feel a bit nervous," Docking says. "But we're a different sort of company and that's what we've been telling institutional investors as we've gone around the market."
Serko is favouring growth over profits as it pushes to expand in the US$380 billion ($433.8 billion) Asia Pacific corporate travel market, while Gentrack is profitable and expects dividend payments.
Recent comments from a private equity giant's boss show why investors might want to approach sharemarket offers involving such investment firms with an extra dollop of caution.
Leon Black, chief executive of Apollo Global Management of New York, told a Milken Institute conference in Los Angeles in April that the current market environment was "fabulous" for selling, Bloomberg reported.
"We're selling everything that's not nailed down, and if we're not selling, we're refinancing," Black said, adding that Apollo had sold about US$13 billion in assets in the previous 15 months.
Private equity sell-downs often draw scepticism from investors, particularly institutions, as they tend to take place at or near the top of a company's business cycle.
The strong run global sharemarkets have enjoyed over the past couple of years also makes it an attractive time to sell.
Christchurch-based fruit and vegetable marketer Scales Corporation and Kiwi glass supplier Metro GlassTech - which are expected to launch IPOs shortly - both have significant private equity ownership.
Milford Asset Management executive director Brian Gaynor says investment bankers would be more careful when negotiating future offers after the collapse of the Hirepool IPO.
"I think the institutions now realise that they do have, in the end, the power to dictate whatever price they think is fair," Gaynor says.
"I think it's great for retail investors because the bookbuild [when institutions place bids to establish the final pricing of an offer] sets the retail price."
Kathmandu shares took a beating this week after the Australasian company revealed that June trading - particularly since the start of its winter sale - had been significantly below expectations on both sides of the Tasman.
As a result, the outdoor clothing and apparel retailer says earnings before interest and tax (ebit) for the 11 months to the end of this month are expected to be 10 to 15 per cent lower than in the same period a year earlier.
The trading update highlights just how dependent Kathmandu is on favourable weather.
Chief executive Peter Halkett says sales across all of the company's major operational areas in Australia and New Zealand, with the exception of Perth, have been affected by a period of dry, sunny and warm conditions.
In short, it's tough selling fleece tops and down jackets in T-shirt weather.
Kathmandu has been one of the stand-out performers among the listed retailers for some time and Tuesday's trading update - which came hard on the heels of a weather-related profit downgrade from The Warehouse Group - prompted a strong response from investors, with shares plummeting by more than 11 per cent to close at $3.15.
The stock closed up 5c yesterday at $3.28, 18 per cent below its record close of $4 reached last month.
Rickey Ward, JBWere's New Zealand equity manager, says the trading update is disappointing but not entirely unexpected given the recent profit warnings issued by other retailers.
Kathmandu still has a few weeks to go until the end of its financial year - July 31 - and some cold weather before then could be beneficial to the full-year result.
The retailer would have welcomed the severe cold front that hit southeastern Australia this week, bringing icy conditions and snow to low levels.
But Kathmandu says any recovery in trading will not be sufficient to make up for this month's shortfall.