QR National's Share Debut Will Test Appetite for New Listings in Australia
A QR National coal freight
Ian Waldie/Bloomberg
A QR National coal freight train makes its way back to a coal mine after dropping off a delivery to Newcastle Coal Terminal for shipment, in Maitland, Australia.
A QR National coal freight train makes its way back to a coal mine after dropping off a delivery to Newcastle Coal Terminal for shipment, in Maitland, Australia. Photographer: Ian Waldie/Bloomberg
QR National Ltd. will test the appetite for Australian share-market debuts today after Queensland state raised A$4.63 billion ($4.57 billion) from the coal-train operator’s initial public offering.
Queensland said Nov. 20 it priced shares in Australia’s second-largest IPO at A$2.55 each, near the bottom of an indicated range of A$2.50 to A$3. QR National stock will start trading at noon in Sydney.
“The fact that they have got it away is a positive since there had been a lot of talk that it would get re-priced,” said Chris Weston, an institutional dealer at IG Markets in Melbourne. “We might see a little bit of upside for the stock given that a lot of institutions didn’t get their full allocation, so they may be looking to buy some on open.”
Bilfinger Berger AG, Germany’s second-largest construction company, pulled the A$1.39 billion initial public offering of its Australian unit Valemus Ltd. in July and Karoon Gas Australia Ltd., an oil and gas explorer, canceled a Brazilian offering last week, citing an unfavorable market. Shares of Myer Holdings Ltd., which raised A$2.1 billion in 2009, trade below their offer price.
The QR National sale included A$4.05 billion in IPO proceeds, an A$80 million dividend and A$500 million for a debt facility arranged by the rail operator, Treasurer Andrew Fraser said in Brisbane two days ago.
‘Right Time’
Retail investors bought 34 percent of the shares and institutional investors 66 percent. Retail investors will receive a 10 cent discount, meaning they pay A$2.45 a share.
Queensland is targeting A$15 billion from asset sales to replace lost revenue and regain its AAA credit rating. The state government will keep a stake of as much as 40 percent in QR National and plans to sell this down after the rail company’s 2012 results, it said in an e-mailed statement.
“These proceeds will now be used to pay off debt and establish a stronger balance sheet,” Premier Anna Bligh said. “Now is the right time for QR National to be backed by private investment.”
QR National will have an A$6.22 billion market value at listing, according to the Queensland statement. Stock exchange operator ASX Ltd. is valued at A$6.57 billion, while Qantas Airways Ltd. is worth A$6.03 billion, according to Bloomberg data.
The Australian government sold one third of Telstra Corp. for A$14.3 billion in 1997, the nation’s biggest public share sale.
Coal Shipments
Brisbane-based QR National operates 700 locomotives, 16,000 wagons and 2,300 kilometers (1,430 miles) of track across Australia, according to a share sale document.
Bank of America Corp.’s Merrill Lynch & Co. unit, Credit Suisse Group AG, Goldman Sachs & Partners Australia Pty, Royal Bank of Scotland Group Plc and UBS AG are the QR National offer managers.
The company expects earnings to surge 75 percent in the next two years as coal shipments rise and mining companies expand projects in Western Australia state.
Earnings before interest, tax, depreciation and amortization are set to increase 42 percent to A$894 million in the 12 months ending June 2011, the company said in the IPO prospectus on Oct. 11. Earnings may rise 23 percent in the following year, the document showed.
To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; Sarah McDonald in Sydney at smcdonald23@bloomberg.net.
To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net
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