The lackluster debut of packaging firm Pact Group Holdings Ltd and property investment manager GDI Property Group Pty on the Australian bourse has dimmed the prospects of next year's pipeline of firms seeking to hold their initial public offerings, Reuters reported. It would seem like investor fatigue will be pressuring the deals set for next year, the report said.
Pact Group Holdings shares plunged 12.6% from their IPO price, closing their first trading day at AU$3.32 while GDI Property Group's share went down 11.5% from its IPO price, closing at $0.89.
The report quoted Bell Potter Securities Limited Senior Adviser Stuart Smith, who said, "I'm afraid the market's got choked on the new issue syndrome. I haven't participated in any and my clients are happy not to."
The poor debuts of the two companies has raised the question whether investors will still be pouring in more money into new firms seeking to go public. Other new listings, such as that of iSelect Ltd that went public in June and Nine Entertainment debuted earlier this month, have also exhibited poor performance, Reuters said in its report. How travel insurance and medical assistance provider Cover-More Group Ltd will perform when it begins to trade on the Australian bourse on Thursday after its AU$521 million IPO still remains to be seen.
The report said the IPO market is set to be hot next year as a lot of listings are expected. Citing a banking source, the report said the potential listings include that of Medibank Private, an insurer owned by the government and private equity-owned healthcare business The Healthscope Group. The Carlyle Group and TPG Capital own The Healthscope Group. Another private equity owned company, Spotless Group, is also expected to hold its debut. Pacific Equity Partners owns Spotless Group. The report also said the $3 billion IPO of Energy Australia, which has long been delayed, may also happen next year.
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