About one third of the website which changed the way 2.8 million New Zealanders bought and sold possessions is being offered up for private investors.
The proposed float of 30 to 35 per cent of auction site Trade Me is likely to attract mum-and-dad investors who typically don't buy shares, according to the chief executive of the stock exchange NZX, Mark Weldon.
Trade Me owner Fairfax Media, which also publishes The Press, announced yesterday the potential initial public offering (IPO) of Trade Me after posting a full-year net loss of A$390.9 million. Trade Me revenue was up 11.5 per cent.
Fairfax chief executive Greg Hywood said the media company would retain a majority shareholding of Trade Me.
But listing the 12-year-old website "success story" would give Trade Me access to more capital for growth.
No timing on the IPO has been announced although UBS has been appointed to manage the listing and former Fairfax boss David Kirk has been appointed non-executive chairman.
Fairfax has said the partial float would happen when market conditions were right, likely to be towards the end of this year.
Trade Me will become a stand-alone company listed on the New Zealand sharemarket.
Founder Sam Morgan is currently a Fairfax director. He sold the company to Fairfax for $700 million in 2006, under Kirk's leadership, and will also sit on the Trade Me board.
Weldon said Trade Me will attract investors, mainly because they are already so familiar with it. The site has more than 2.8 million registered users.
"It's in a good sector and its historic financial performance has been strong, Fairfax as the majority owner is staying in as major owner and remains invested and Sam Morgan and David Kirk are people they know, so it has all the attributes of something you would expect to be very successful."
Weldon said the Trade Me partial float would be a catalyst for investors to come back into the market.
"In five years from now I want to see the number of people in New Zealand that own more than 10 per cent of their portfolio in shares – I want that to double."
Analysts have valued Trade Me at between $1.3 billion and $2b.
A report by Royal Bank of Scotland analyst Fraser McLeish sparked speculation around a potential Trade Me IPO earlier this year and he valued a 50 per cent stake then at A$600m.
He also said a retail float of the company would "fly off the shelves in New Zealand".
David Kirk said he could not comment on future strategy but the "business had performed well in the past and I would expect it to perform well in the future".
- The Press
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