Behind-the-scenes book builds for glass manufacturer Metro Performance and apple grower Scales got under way yesterday and indications from market sources are that there is a strong "push back" on pricing.
Both share offers involve substantial sell-downs by their majority private equity owners and the fear was that they would go the same way as last week's initial public offer for Hirepool, which institutional investors rejected as being too costly.
One financial market source said institutional investors were pushing back on price but that it felt like both offers would "get away".
"My feeling for the Scales and Metro Glass book builds is that, unlike Hirepool, they will definitely get away," said one financial market source, who requested anonymity.
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He said it came down to a question of the price range for both offers. "Probably the lower end of the range is likely when they both price."
Brokers sought expressions of interest for Metro Performance Glass pitched in a $1.65 to $1.90 range for an auction-style book build, which ends today. The offer is aimed at raising $237 million to $273 million.
The sale of Metro Glass by Australian private equity company Crescent Capital and others is aimed at creating an NZX- and ASX-listed company with a market capitalisation of about $305 million to $352 million.
Other shareholders are Anchorage Capital, JP Morgan, Portigon, Sankaty Advisors and Deutsche Bank. The selling investors expect to keep 20 per cent of their slice after the offer.
Another source said institutional investors were struggling to get past the bottom end of the range for both offers. The source added there was stronger resistance to Metro Glass.
Metro Glass said it would register a prospectus on July 7.
Scales' share offer is priced in an indicative $1.60 to $1.85 per share range and the company expects to list on the NZX on July 25. The final offer price is expected tomorrow.