SUBDUED trading in Multiplex Group shares this week left brokers pondering the prospects for the numerous other floats coming to market.
Brokers had high hopes for Multiplex trading after its initial share offer was four-times oversubscribed.
There was a high volume of trading when the stock listed on December 2, with 35 million shares changing hands.
Brokers said institutions were the main sellers while private investors, who struggled to get their hands on the stock before the listing, were the main buyers.
The shares reached a peak of $3.25 but closed the day at $3.12, almost in line with the issue price of $3.08.
Multiplex raised a total of $1.2 billion through its float, making it the second biggest in Australia this year behind general insurer Promina’s $1.9 billion initial public offering in May.
The two companies faced vastly different conditions, with Promina battling against a weak stock market and Multiplex marketing its shares in the midst of buoyant property and stock markets.
The improved sentiment on the stockmarket has been highlighted by the 50 new listings on the Australian Stock Exchange since July 1.
The ASX has another 28 companies lined up to list before the end of the year.
However it is far from certain that all of those companies will make it as far as a listing.
“The market is suffering some indigestion,” said Hartleys investment adviser Ian Parker.
“Some of the floats, particularly the smaller resource floats, are just opportunistic.
“There is some absolute rubbish coming onto the boards because there is so much demand.”
Euroz institutional dealer Peter Diamond said future prospects were “very stock specific”.
He said Multiplex shares held up well, considering the size of its capital raising, the change in market conditions since the stock was priced and the lift in interest rates.
“Most people expected it to finish a little higher but personally I’m not surprised,” Mr Diamond said.
“I think it did very well to come on at a small premium.”
Mr Diamond predicted the Multiplex share price would strengthen and also predicted a strong opening by copper miner Tritton Resources, which listed this week.
Euroz was underwriter for Tritton’s $15 million IPO.
The company received applications for more than $30 million worth of stock.
Another recent IPO that attracted strong support was for Nickel Australia, which set out to raise $12 million and received applications for $26 million.
Nickel Australia is a spin-off from Croesus Mining and is headed by experienced geologist Tony Rovira.
Mr Parker said investors needed to look carefully at the fundamentals of each float and assess the quality of the management team.
Investors in the Multiplex float have to make two payments, with $3.08 payable on application and a second instalment of 97 cents due on December 15 2004.
Most of the float proceeds are being used to acquire a portfolio of commercial, office and retail buildings in Australia and New Zealand.
The company is expected to post a net profit of $80.8 million in the 2004 financial year and $98.6 million in 2005.
