Rakon ready to race out of starting stall

Shares in Rakon look set to shrug off market weakness and surge when they debut on the sharemarket today.

Stephen Wright, head of advisory at ASB Securities, expected a favourable reception for the GPS technology company, which could push shares issued at $1.60 as high as $2 each.

"Having said all that, markets may be a bit weaker," he said.

The NZX was down on Friday and fell further yesterday, while markets around the world also weakened.

"There should still be, I would hope, some reasonable demand for Rakon because obviously it's a good story," said Wright.

The company designs and manufactures the high performance crystals and oscillators used in global positioning systems products.

Wright expected a mixture of retail and institutional buyers would look at increasing their holdings in Rakon because "everybody's got less than they wanted; that's for sure".

The Business Herald understands some shareholders were offering to sell shares at prices ranging from $1.80 to $2 on the eve of trading yesterday.

Macquarie Equities investment director Arthur Lim also thought a premium of between $1.80 and $2 was possible.

"All the indicators point towards it having a successful listing," Lim said.

"It had good reception in the pre-listing market [and] demand has been strong from not just New Zealand but reportedly from overseas."

The company would have a market capitalisation of $170 million based on the issue price of $1.60 a share.

The initial public offer of 41,250,000 shares valued at $66 million closed on Friday with allocations being made to retail brokers and institutions, while demand outstripped supply. There was no general or public pool for shares.

The money raised from the listing would fund growth through new product development, investment in manufacturing equipment and factory expansion.

On listing, about 39 per cent of Rakon's shares will be held by new investors, with the rest held by pre-listing shareholders including Navman founder Peter Maire.

Maire and his investment partners bought 20 per cent of the Auckland-based company in November.