Trade Me float priced at $2.70 a share, will take on $166 mln new debt

Trade Me float priced at $2.70 a share, will take on $166 mln new debt

The partial float of online auction company Trade Me Group has been priced at $2.70 a share, and the online auction site will take on $166 million of new debt.

That’s at the top end of an indicative range of $2.30 to $2.70 a share in a bookbuild to sell shares to institutions and set broker allocations.

Owner Fairfax Media will walk away with $529.5 million from the sale of 134.6 million shares, or 34 percent of Trade Me Group, because of the new Trade Me debt.

That comes after Fairfax cancelled some of its own related party debt to Trade Me when it took a $220 million dividend in the 2011 financial year.

Fairfax Media will register the prospectus for the partial float in the next two days. The sale is underwritten by UBS New Zealand.

Brokers say it was unusual to hold a bookbuild before a prospectus is registered. The bookbuild began yesterday at 9am.

Fairfax said in August that it intended to sell between 30 percent and 35 percent of Trade Me via an IPO and would use the funds to pay down debt and increase its dividends.

Fund managers have seen pre-float documents suggesting a valuation of more than $1 billion for the whole business.

The top end of the valuation range for the float is around 16 times projected net profit for 2012.

Trade Me lifted net profit 9.6 percent to $69.7 million in the year ended June 30, on revenue of $128.8 million, which grew from $114.4 million a year earlier. Pretax profit rose almost 11 percent to $101.3 million.

The process of the float is being managed around the New Zealand election on Nov. 26 and there is a desire to get the float away before the summer holidays.

Fairfax acquired Trade Me for $750 million in 2006. Founder Sam Morgan is on the Fairfax Media board and former All Blacks captain David Kirk, a former Fairfax chief executive, is set to chair the demerged company.

Trade Me Holdings Ltd and Fairfax Digital Assets NZ Ltd and Fairfax Digital Holdings NZ Ltd have been reserved as names at the Companies Office.

Shares in Fairfax last traded at 93 Australian cents on the ASX. The stock has shed 33 prcent of its value this year.

(BusinessDesk)

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9 Comments

The old "burning match" trick hey.  Tried and tested IPO strategy alive and well in NZ.

Bookbuilding is standard IPO practice innit.

Who's buying?

What's available to retail?

Will it be in the top group that requires index funds to buy in?

I well remember taking over $27 for my AMP shares and they have never got anywhere near that price since.

NZX - Smoke and mirrors - just as bad as dealing with a real estate agent!

Trademe ..damned Aussie owned buiness just like those stinking banks...someone should build a kiwi internet auction site.......oh yeah thats right..it was wasn't it.?? blimmen asset sales..the gummint should step in and buy it back for us...just like that finance wizard cull em did with railways......

If the road transport industry were required to pay the real cost of the road damage heavy vehicles cause, rail and shipping would become economically viable and Cullen would be vindicated.

Road damage caused is proportional to the fourth power of a vehicle's weight. Do the sums.

:)

ha ha..you may well be right...(I dunno) ... but to buy it back and expect to work in the existing rule structure seems rather dumb.  Did he actually have a plan to change the rules before he was a###d out.....or has this been made up after the event? 

I won't be buying any straight away, I will probably wait at least 6 months before I look at them, to see what they level out at. I think a lot of mum and dad investors are going ot rush in and buy them, and they probably don't have a clue about online companies and how they run.

Apparently its:

'twice covered' at top-end of target price range

 

Not tempted for a quick flick? Stag - I believe is the term.