Two days ago, hotel group Mantra and online retailer MySale were preparing for initial public offerings, but today both these listings appear to be dead in the water.
The Australian Financial Review reports Mantra’s IPO has “collapsed in disarray”, with joint lead managers UBS and Macquarie Capital, along with Mantra management, cancelling the float indefinitely at the eleventh hour.
The newspaper reports there was a lacklustre response from institutional investors to the group’s book build.
OzSale, owned by MySale, has also pulled its initial public offering and will instead look for a strategic investor to take a stake in the business, according to the newspaper.
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OzSale confirmed to SmartCompany last year that it had appointed Macquarie to lead the charge on an ASX listing but those plans now appear to have been shelved.
SmartCompany contacted Mantra, OzSale and UBS for comment but did not receive a response prior to publication, Macquarie declined to comment.
Peter Esho, chief market analyst at Invast, told SmartCompany despite Mantra and MySale’s moves to pull the plug on their floats the appetite was still there for public listings.
“The IPO market is opening up; it is still quite selective. It is not an all-out bullish market yet but there is more confidence returning to the market,” he says.
Esho points to Nine, Veda and Dick Smith, which have all recently completed successful listings on the ASX.
“I think similar industrial businesses on reasonable earnings multiples coming to market will be well received, but the exotic stuff probably won’t fly until the market heats up a little bit more, probably in the next year,” he says.
“We are seeing more listed companies raising equity and doing deals, acquiring other businesses, which is a good sign there is more tolerance for risk coming back.”
Esho says it is likely there were questions over the valuations for the Mantra and MySale IPOs.
“That’s why IPOs don’t eventuate, it will be on the numbers, you don’t get big valuations on sideways trending markets,” he says.
“I don’t think we are at the point where the market is willing to pay silly valuations or take on IPOs with excessive debt in the property space.”