KEY POINTS:
Opus International Consultants, the former Ministry of Works, made a stellar debut on to the stock exchange yesterday - closing 20 per cent up on its listing price.
Market commentators said the float had been priced to succeed to avoid the dips experienced by other equity listings this
year.
The civil engineering firm debuted on the sharemarket at $1.99, 34c above its offer price of $1.65 and hit a high of $2.05 during the day with more than 300 trades. Shares closed at $1.99.
Opus is only the third equity public offering to list on the NZX main board this year following accountancy software firm Xero and mining group Pike River Coal.
Both had initial offer prices of $1 per share but since listing in June Xero has traded as low as 70c per share and Pike River Coal, which went to market in July, has been down as low as 80c per share. As of yesterday both continued to trade below their initial offer price.
The only other equity listing, Burger Fuel's $8 million float on the NZAX, has also seen its share price plummet hitting a low of 60c per share from its $1 initial offer price. It closed yesterday at 75c per share.
One market source said the outcomes of the other floats had clearly been recognised by Opus and priced into the stock accordingly.
"They wanted to ensure this was successful. They priced it at a level where they have had over subscription. The vendor was clearly wanting a healthy secondary market."
Fisher Funds chief investment officer Warren Couillault said it was a firm price and it was possible that it was priced fairly to ensure the float went well.
Couillault said Opus was a good quality business which had a feeling of safety about it especially given the recent market volatility. "It has good growth opportunities," he added.
The small size of the float has also been pinned as a reason behind its early success.
Only 19 per cent of the company was offered to new public shareholders while Malaysia-based Opus Berhad (formerly Opus International Group) has retained 66 per cent in the company and employees and directors own the remaining 15 per cent. Opus Berhad has said it will not sell any of its stake within the next 16 months.
Opus chairman Basil Logan said the share price increase had been slightly higher than expected.
"We priced it to ensure there was good demand but I would have to say we were pleasantly surprised."
He said the company had seen strong interest from its employees and during the offer period the company increased the $3 million employee pool slightly to cater for demand.
Logan said the strength of the company lay in its infrastructure business and the increasing demand both from New Zealand and internationally for new infrastructure and maintenance work to extend the life of existing infrastructure.
Opus has already announced plans to further extend its business in Australia, Canada and the UK.
Logan believed the expansion into countries which are similar to New Zealand was also attractive to investors.
Opus, formerly the Ministry of Works and Development, went private in 1988 and was bought out by Malaysian firm Kinta Kellas in 1996 which then changed its name to Opus International Consultants.
The company had produced returns of around 20 per cent over the last three to five years and employs more than 2145 staff across 71 offices and 11 laboratories.
Projects include a London Underground station upgrade, building Vancouver's Sea-to-Sky Highway for the 2010 Winter Olympics, a roading project in Canada's Kicking Horse Canyon and the Epping to Chatswood underground rail project in Sydney.
