PEET & Co’s sharemarket float is being marketed at a time when demand for new stocks has waned.
It also follows a period of strong support for property stocks, which have been considered a ‘safe haven’ for investors.
The challenge for Peet and its lead manager UBS is to convince investors that it represents good value.
The waning support for new floats was highlighted by last month’s cancellation of the $230 million listing of mining and engineering company Bradken. The planned float of B&D Doors was also pulled in favour of a trade sale.
One broker said institutions were scrutinising new floats far more closely after watching private equity funds make huge profits on transactions such as the Pacific Brands float.
Institutions had also been burnt by some underperforming floats, such as mining company Zinifex.
The Peet float also coincides with major changes in the property sector with Frank Lowy’s Westfield group in the midst of a three-way merger.
The planned merger of Lend Lease and General Property Trust is also reshaping the sector.
DJ Carmichael analyst Steve Piotrowski is confident there will be good support for Peet & Co.
“This is a quality offering and the appetite for quality offerings is going to be strong. Investors perceive residential property and housing is a low risk segment.”