By Eli Greenblat and Jamie Freed
THE market’s breakneck shift from fear to greed has whetted the appetite of investors and merchant bankers eager to take advantage of bullish sentiment, with department store Myer’s decision to fast-track a float by Christmas likely to kick off an avalanche of new offerings.
Early indications are that a slew of floats worth up to $10 billion could be at various stages of investigation, with businesses such as Carsales, Hoyts, Link Market Services, clothing company Kathmandu and a number of Queensland public assets on the agenda.
Also returning to the market with a multibillion-dollar float after a first attempt was scrapped due to the financial crisis could be Qantas’s Frequent Flyer business and West Australian chemicals company Burrup.
Elsewhere, CSR and Orica are likely to raise large licks of capital should they proceed with demerger programs.
Stoking the confidence of the owners of unlisted businesses has been the Australian sharemarket’s resilience since March and generally improving conditions across major economies and bourses.
The market has rallied 15 per cent this year and many believe positive domestic economic data, including retail sales and consumer confidence indicators, has provided a window of opportunity for floats which had been closed since last year.
‘‘It is becoming a more favourable environment for public offerings,’’ Hugh Giddy, of Cannae Capital Partners, said. ‘‘It continually surprises me how much people will put up. The banks raised $2 billion. There is money out there.’’
The Myer chief executive, Bernie Brookes, underlined the confidence of many private equity owners yesterday when he announced an accelerated review to investigate a float of the department store.
Myer’s private equity owners are targeting a float next year at the end of the 50-month turnaround plan.
Mr Brookes said the robust sales performance of the group into the fourth quarter plus a range of positive macroeconomic indicators tipped the hand of the company’s majority owner, Texas Pacific Group.
A prospectus could be with investors as soon as October with analyst valuations of rival David Jones suggesting the Myer business could be valued at about $1.7 billion.
A float of Myer before Christmas would easily make it the biggest float of the year with the market’s list of new entrants tanking to a handful this year as the financial crisis lessened appetite for raisings.
As part of the transition to a public company, the Myer executive chairman, Bill Wavish, has announced his retirement and will be replaced by a new non-executive chairman, Howard McDonald, a former managing director of Just Group.
The number of floats fell from 201 in 2007-08 to just 27 in 2008-09, while the value of funds raised dropped from $5.9 billion to $1.1 billion.