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.