The largest IPO in Australia this year priced yesterday (April 6) after a two-day bookbuild process that saw the arrangers ask institutions to re-bid for the stock at a higher price.
ôEarly on we were oversubscribed at the A$2.27 price so we decided the only way to legitimately allocate the shares was to go above the bookbuild range and ask investors to re-bid,ö explains Robin Bishop, executive director at Macquarie Bank and part of the ECM team.
ôIn fact we could have gone a lot higher because we received more bids at the A$2.37 price than at A$2.27, but we decided to draw a line in the sand at a 10 cent increase.ö
Bishop says added interest at A$2.37 came as investors realised that allocations might be tight. ôSo they increased the size of their bids in order to stand a better chance of picking up stock.ö
By drawing a line in the sand at a 10 cent increase, the co-leads are hoping the shares will trade up when the company lists on the Australian Stock Exchange (ASX) today.
The deal performed well thanks to a booming ASX which reached a new peak early last week and also thanks to a shortage of large IPOs. ôThere was also news in the market yesterday about Rinker upgrading its results and Rinker is one of Dyno NobelÆs biggest customers,ö explains Bishop.
Bishop says offshore demand was strong and as much as 30% of the shares went to local retail investors. The float raised A$1.1 billion and gives Dyno Nobel a market capitalisation of about A$1.8 billion ($1.3 billion).
The global explosives company was bought by Macquarie Bank and a consortium of nine other insitutional investors last year for $1.7 billion in an innovative deal designed to help its client Orica secure certain Dyno assets.
OricaÆs own attempts to buy the company had been thwarted by US anti-trust laws so the consortium stepped in, arranged and financed the acquisition and then sold off some of DynoÆs operations in Europe, Africa, the Middle East, Asia and Latin America to Orica for $685 million.
TodayÆs listing of Dyno Nobel completes the circle for Macquarie Bank which has reduced its shareholding in the business from 21% to 3.4% of the issued capital.
The bank has agreed to voluntary escrow its remaining 29 million shares until three days after the announcement of Dyno NobelÆs 2006 financial year results.
All nine other institutional investors in the consortium also sold shares during the float, offloading at least 30% of their stock. Under the arrangements that established the consortium, Macquarie Bank receives a portion of any profit achieved by the other members.
Bishop expects the nine original shareholders to hang on to their remaining shares. ôThey are natural holders of the stock and have been rising with the fortunes of the company for six months now.ö
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