02/10/2007 - 22:00

US fears fail to slow IPO action

02/10/2007 - 22:00

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Western Australia’s investment community has shrugged off fears of trouble in the US economy after problems in the US mortgage market triggered profit warnings from financial services groups and sent global stock markets plunging last month.

Western Australia’s investment community has shrugged off fears of trouble in the US economy after problems in the US mortgage market triggered profit warnings from financial services groups and sent global stock markets plunging last month.

Despite the intense volatility, the number of initial public offers continued to climb, according to research released this week from Deloitte.

Deloitte said the number of floats in the September quarter increased in both number and value.

Money raised for WA floats increased by about 140 per cent to $573 million, compared with $273 million raised in the June quarter.

However, the big increase in value was largely attributed to mining services contractor NRW Ltd, which raised $304 million through the issue of 152 million shares at $2 each.

NRW was recently rated by Deloitte as the best performer of the top five biggest floats in the country during the September quarter.

NRW was the only float to deliver a positive return for shareholders during the quarter, Deloitte said.

The other four big floats assessed by Deloitte included RAMS Home Loans, Ellerston GEMS Fund, Babcock & Brown Communities, and Orchard Industrial Property.

The best performing IPOs during the quarter were resources companies – Centaurus Resources Ltd, Gulf Mines Ltd, Mavuzi Resources Ltd, Ironclad Mining Ltd and Red Emperor Resources Ltd.

During the September quarter there were 33 WA floats, up from 20 in the previous corresponding period.

There were 31 floats in the June quarter, Deloitte said.

Nationally, about $3.5 billion was raised during the September quarter despite the market’s jitters during August and September.

The market has since rebounded and hit record highs this week.

Stockbrokers agree the market for raising money remains buoyant despite increased volatility in the market in the wake of mortgage strife in the US and the subsequent tightening of credit markets.

Patersons Securities is one Perth firm revelling in the continued growth.

It raised about $1 billion in new equity in 100 separate transactions during 2006-07, which was the largest number of capital raising deals by any broker in Australia, according to a review by Thomson Financial.

The stockbroker last week revealed a profit of $9.3 million in the 12 months to June 30, up 82.3 per cent on the previous corresponding period.

Patersons Securities head of corporate finance, Aaron Constantine, said the firm had continued to experience strong capital raising demands from new and existing clients this financial year.

Patersons chairman Michael Manford said revenue during the September quarter had increased on the previous corresponding quarter.

The firm is gearing up to grow all its divisions, as well as opening in to new markets, including Brisbane.

Deloitte corporate finance partner Nicki Ivory said WA-based IPOs in the September quarter generated an average share price gain of 14 per cent, compared with an 8 per cent increase across the national market.

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