Market floats back to life after drought

A raft of new listings will hit the New Zealand market before the end of the year and commentators say more are in the pipeline.

On Friday, retailer Kathmandu broke a nearly two-year initial public offering drought to launch onto the NZX and ASX.

Its earlier-than-expected listing, (originally the date was set down for November 18) came in the same week as Hamilton biotech BioVittoria opened a $20 million capital raising to boost its calorie free natural sugar business for a listing expected on December 2.

South Island dairy company Synlait also announced plans for its initial public offering expected to raise $150 million to $170 million for a pre-Christmas listing. Property investment company DNZ has also revealed plans to list its business, expected to be worth up to $800 million, on the NZX before the end of the year.

NZX head of market products Geoff Brown described the pre-Christmas activity as "frenetic".

Brown said the activity boded well for 2010 although the pipeline was difficult to read as it took a minimum of three months to prepare an initial public offering. But he said companies would be closely watching the take-up by retail investors.

Craigs Investment Partners head of research Mark Lister said he was expecting a raft of listings as pent-up demand suppressed by the global financial crisis was let loose.

"We haven't had an IPO since 2007, everyone has held back because of the global financial crisis."

But now that markets had recovered some way, investors were feeling more comfortable with the world and the bankers had backed off, companies were coming back to list again.

"We have heard there is a reasonably strong pipeline."

Lister said floats were also coming onto the debt market again with property trust Kiwi Income announcing its income notes, Goodman also planning some and Auckland International Airport recently raising more money.

Lister said there appeared to be a bit of momentum going into next year.

Andrew McDouall, managing director of McDouall Stuart and lead broker on the BioVittoria float, said he knew of at least four more floats expectedto come to the market early nextyear.

Among those being touted are the private equity owned businesses Hirepool and REDgroup alongside finance company South Canterbury.

A new public private partnership infrastructure fund being launched jointly by Lloyd Morrison's Morrison & Co and brokers Craigs Investment Partners also has the potential to be listed.

Mint Asset Management's Shane Solly said there were a lot of opportunities emerging but warned investors to be cautious

He said some IPOs were coming up as a result of banks remaining tight on their lending practices with companies forced to come to market to raise the cash instead.

"It's important people do read the documents. People need to understand what they are investing in."

Solly said IPOs were not about making a quick buck and investors should be prepared to stick with the company for least the medium term before they realised any gains.

IPOs THIS YEAR

Kathmandu: Listed November 13, AUS $340 million.
Biovittoria: Expected to list December 2, $20 million.
Synlait: Expected to list before Christmas, estimated $150 million - $170 million.
DNZ: Expected to list late December, up to $800 million.

OTHER CONTENDERS

* South Canterbury Finance.
* Hirepool.
* REDgroup (Whitcoulls, Borders, Angus & Robertson, Supanews).
* Morrison & Co/Craigs Investment Partners Public Private infrastructure fund.