TradeMe shares debuted successfully on the New Zealand and Australian sharemarkets yesterday, offering a 5c premium to the $2.70 issue price on opening, and then racing briefly to $2.93.
Shares closed at $2.90 - a 7.4% gain on the issue price - on high volume of more than 16.6 million traded during the day.
Fairfax Media, which retained a 66% stake in TradeMe, raised $363.5 million from the sale of 134.6 million shares at $2.70, using the proceeds to pay off debt. TradeMe, which has about 2.8 million members, was bought by Fairfax for $750 million in 2006 from founder Sam Morgan, who is on the Fairfax Media board.
At $2.70 per share, TradeMe has a market capitalisation of about $1.07 billion.
Forsyth Barr broker Peter Young said TradeMe shares initially started slow, opening at $2.75, and then picked up pace.
By 2pm yesterday, 14 million shares had changed hands.
"The institutions came in buying in size and punched the price through to $2.93, with the price then pulling back," he said.
The total volume traded of TradeMe was about a quarter of the entire New Zealand market turnover, he said.
"TradeMe management would be very pleased with the listing, given the markets were very weak overseas and also the current unstable situation in Europe," he said.
Craigs Investment Partners broker Chris Timms said while institutions appeared to be topping up, most mum and dad investors did not take profits, but sat tight instead while the shares traded steadily in the high $2.80s.
He said there had been negative press before the listing about the upper range of $2.70 per share, but said detractors had been proved wrong with trading yesterday.
Financial accounts released yesterday showed "impressive" TradeMe revenue of $128.8 million for the year to June, with before-tax profit of $101 million and an after-tax profit of $69.7 million, Mr Timms said.
TradeMe chairman David Kirk said the offer had attracted strong support from a wide range of institutional and retail investors.
"We have a strong and diverse range of shareholders including TradeMe members, mums and dads, institutions, and TradeMe staff," he said in a statement.
