'Westies', wine do combine

Jim Delegat, with a certificate to mark the company being floated on the NZX. Picture / Greg Bowker

Pretty good for a "couple of kids from West Auckland", said Rose Delegat as she and brother Jim watched shares in their wine company Delegat's list at a healthy premium to their offer price yesterday.

"I'm always a Westie," chipped in managing director Jim Delegat at a listing function in Auckland.

The pair, offspring of Croatian migrants, grew up in Henderson on the family's original winery site.

The wine exporter's $45 million share offer at $1.40 a share closed oversubscribed last week.

About 900,000 shares were traded on market within 15 minutes, most at $1.55 - almost 11 per cent more than the offer price.

Members of the public applying for up to 8000 shares in the float got them all - someone selling that amount of stock yesterday at $1.55 would have made a pre-brokerage profit of about $1200.

The shares finally closed at $1.55 after spiking as high as $1.57.

Total volume for the day was just under 2.3 million shares, equal to about 7 per cent of the 32.1 million shares listed.

The float's joint lead manager, ABN AMRO Craigs, said such turnover - more than the 5 per cent than might normally be expected - was a sign of solid interest.

The price rise will on paper have made the Delegat family even wealthier but Jim Delegat was philosophical: "It might go down tomorrow."

He stressed the family were long-term shareholders committed to expanding the business.

By one measure at least, Delegat's still appeared to be relatively cheap despite the premium being paid.

ABN AMRO Craigs executive chairman Neil Craig said the $1.40 offer price represented a price earnings ratio of about 10.1 based on projected 2007 earnings and even at $1.55 the PE was about 11.

The company said the average PE for international wine companies was about 15.

Asked why the float had, therefore, been at $1.40, investor banking director James Beale said the lower PE for Delegat's reflected market scepticism about whether it could achieve its projected earnings.

The listing was also satisfying for NZX chief executive Mark Weldon.

He said Delegat's was a "growth story" and New Zealand needed "a good number of growth stories.

"As far as people coming and going, we obviously love companies to come in," he said.

"We like seeing new shareholders in the market."