Investors LIC their IPO wounds
Listed investment companies (LICs) dominated capital raising activity on the Australian Stock Exchange (ASX) in the March 2004 quarter, with five LICs raising a total of $359 million or 60 per cent of all funds raised, according to aDeloitteCorporate Finance.
However all five offerings were down on their initial listing price - on average they were down 6.6 per cent - comparing poorly against the average performance of 28 per cent for the other 26 companies that listed over the quarter.
At the close of business on FridayHunter HallGlobal Value was down 8 per cent a week after listing, while Contango Microcap was down 7 per cent one day after listing.
Meanwhile other March quarter listed LICs were also down -Van EykThree Pillars by -3 per cent, Wilson Leaders (8 per cent) and Oceana Gold (7 per cent).
The large numbers of IPOs over the period pushed the total for the nine months ending March 2004 to 112, and with over 30 companies scheduled to list in the June quarter, the market is scheduled to break its previous IPO record of 154 set at the height of the dotcom boom in 1999-2000.
According to Deloitte, the current boom is in stark contrast with activity a year earlier, where weak equity markets and threat of war in Iraq limited the number of IPOs to only eight companies and raised $52 million.
The market average returns for the March 2004 quarter, where boosted by exceptional returns for a handful of small IPOS, with Hibernia Gold up 370 per cent, while Signature Brands and food and household company Piquant Blue were up 190 and 90 per cent respectively.
AUTHOR
Craig Phillips
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