KEY POINTS:
Pike River Coal shareholders must be an unhappy lot at the moment.
Since the shares debuted on the sharemarket on July 20, investors in the coal mine's initial public offering have seen their $1 shares slump by 14 per cent to 86c.
True, the timing of the Pike River float was hardly fortuitous - the sub-prime loan meltdown in the United States has seen sharemarkets around the world fall.
But the NZX's is down just 3.4 per cent since July 20, making Pike River quite an underperformer.
On the face of it this is quite surprising, given that Pike River tried to raise just $65 million, but said it had accepted $20 million in oversubscriptions.
But it just goes to show that the word "oversubscription" often doesn't mean much in this context.
In this case it means that Pike River was trying to raise $85 million, but would have gone ahead with the float if it got only $65 million.
The key to a good IPO is not to sell all the shares you can into a float, so that some investors are left hungry for more and there's demand in the secondary market.
That way, with any luck, the shares will rise, or at least hold on to their value.
Pike River and its advisers, McDouall Stuart, appear to have mismanaged this, with the result that Pike River shares have drifted as low as 80c.
Wellington-based McDouall Stuart seems to have had bad luck with its floats in the past few years.
It floated L&M Petroleum at 22c in January, but is now trading at 11c. Glass Earth, which it floated at 25c in October, is now trading at 22c.
Its big success is Dominion Finance Holdings, which it floated for $1 in July 2004.
It's trading at $1.44 now - a 44 per cent premium on the IPO. But even that is slightly underperforming against what the NZX-50 has done over the same period.
Up, up and away
A couple of months ago, there were said to be up to eight different parties looking at buying Auckland Airport. Now only one remains.
Whatever airport shareholders might hope, it looks as if Canada Pension Plan will have a clear run at the airport. That's hardly likely to produce the sort of bidding tension that would lead to the best possible price for shareholders.
Certainly the $3.80 a share that Dubai Aerospace Enterprise said it was planning before its bid fell apart won't be matched.
The price the Canadians will offer will be much closer to the $3.10 it dangled in front of funds to try to prise some stock from them back in June.
Unlike the DAE offer, it won't contain a premium for control, with CPP seeking a stake of 49 per cent or less.
There's still only scant detail about the offer being made by CPP, despite it being some months since the fund began due diligence on the airport. One thing they did reveal, though, is that their proposal "will involve the issue of new securities".
All of this raises the question of why the airport board is still speaking to the fund and considering tipping the airport into some sort of new vehicle for the benefit of a potential minority shareholder.
The offer is hardly likely to be a blockbuster and it's not as if the airport needs to raise any capital.
It has enough capital to fund its current strategic plan and if it didn't, it could easily raise cash on the bond market.
The board would argue that it has a duty to listen to any proposal that might be beneficial to shareholders.
But CPP has had more than enough time to get its act together.
The board should push the fund for a quick resolution: make an offer or be on your way.
* Christopher Niesche is business editor of the Herald.
