Financial market sources say a reasonable level of investor interest has been shown in market newcomer Summerset Group, but institutions and brokers are being tough on the pricing of the company's share issue in the lead-up to its book-build, which starts today.
They said there was pressure to price the issue at the lower end of the retirement village company's indicative range of $1.40 to $1.60 a share.
A book-build is an auction-style process aimed at institutions and retail sharebrokers, who bid for their share allocations.
Ultimately, it will be up to Summerset's majority owner, Australia's Quadrant Private Equity, to set the final price.
"My understanding is that there is good interest at the lower end of the indicative pricing band," said one fund manager.
"People are being reasonably tough on price but from what I gather, there is sufficient interest for this thing to come to the market."
Summerset runs along similar lines to NZX-listed Ryman Healthcare. Quadrant, which is selling down 30 per cent of its 97 per cent stake, will remain a majority shareholder, and will therefore be keen to see the share price perform well on listing.
The book-build does not bind Quadrant to the highest price and it will be conscious not to overprice the issue, said one source.
The share offer opens on October 10 and closes on October 26.
The shares are expected to list on the NZX on November 1.
The Summerset offer is being seen as an important litmus test of investor confidence ahead of two other issues expected over the next few months. Vision Senior Living is expected to float this year or early next year and Fairfax expects to float 30 to 35 per cent of Trade Me before the year's end.
All three floats have been designed to hit the market before the Government's planned partial privatisation of four state-owned energy companies is set in motion in the second quarter of 2012, assuming the National Party is returned to power at next month's general election.
- APNZBy Jamie Gray Email Jamie