Trade Me is expected to become one of the top 10 listed
companies on the New Zealand stock exchange after its former
owner Fairfax sold its remaining 51 per cent stake in the
Institutional investors received notification of their share
allocations late yesterday after a two-day bookbuild bidding
process was undertaken by investment bank UBS.
One New Zealand fund manager who did not wish to be named
said the offer appeared to have been heavily scaled due to
high demand for the shares, while another described it as a
Earlier yesterday some New Zealand investment managers
expressed concern that a high proportion of the stock might
go overseas particularly to large Australian investors.
The source said it was not clear how consistent the scaling
had been across all parties but Trade Me's inclusion in the
ASX200 index appeared to have attracted the interest of a
number of Australian managers.
Trade Me is expected to move up to 170 on the ASX and sixth
place on the New Zealand stock exchange, forcing managers who
track the indices to increase their stakes.
Any move into the NZX 10 index would not officially take
place until March, when the NZX undertakes its next review.
The share selldown is expected to result in a number of
substantial security holder notices where those who own more
than 5 per cent have to declare themselves to the market.
Ellerston Capital, a fund manager controlled by rich-lister
James Packer, emerged as a substantial shareholder of Trade
Me in August, sparking speculation that the Packer family
could make a bigger play for the online auction site.
But the Herald understands that a cornerstone investor is
unlikely to emerge from the deal, leaving Trade Me's share
register wide open.
Fund managers spoken to yesterday also believed the stake was
unlikely to end up with a single major player in the online
"I'm sure that this [stake] would have been shopped around
among potential 'trade' buyers, and it's interesting that no
one has really put up their hands," one fund manager said.
"If there were other trade buyers, one would have thought
that this would have been an opportunity," he added.
"But who knows what might happen a year or two down the
There was also concern in the market over Trade Me's
performance and growth potential. Trade Me's share price hit
$4.45 in late October but has drifted downwards of late and
it was trading at $4.05 on Friday before the bookbuild began.
"There are concerns that Trade Me's trading position may not
be so great.
"People are starting to question whether the share price has
run ahead of itself," one fund manager said.
But Trade Me chief executive Jon Macdonald said Trade Me was
still on track to meet guidance given at its annual general
meeting in October.
Macdonald said the change in ownership would not make any
difference from an operational point of view as Trade Me had
always operated independently from Fairfax.
"It's very much business as usual."
Shares in Trade Me were expected to resume trading this
Fairfax's move means the company will exit Trade Me
Shares in Fairfax closed up A0.5c at A51.5c yesterday.
additional reporting Jamie Gray
- Tamsyn Parker of the New Zealand Herald