Dick Smith Electronics Ltd may wait until next year to conduct its initial public offering, giving investors a chance to see further turnaround in the business in the key Christmas shopping period, which accounts for about a fifth of an electronics retailers annual profit.
If it wants to pursue an IPO by year end, owner Anchorage Capital Partners may offer fund managers a significant discount on any shares they buy to whet their appetite in an increasingly crowded IPO market that may see as many as seven new listings by year end.
Citigroup Inc estimates 19 per cent of an electronics retailers’ yearly profit occurs in the month of December. The Australian Retailers Association puts spending in shops at $41.2 billion, or 16 per cent of total annual expenditure, from mid November to the end of December.
Still, the more than doubling in the share price of electronics retailer JB Hi-Fi Ltd. this year has encouraged Anchorage to try and push for a Dick Smith IPO by December. Anchorage has hired Goldman Sachs Group Inc and Macquarie Group Ltd to manage the Dick Smith share sale.
The private equity firm is expected to make a substantial profit on its investment, estimated by some to reach more than five times the equity invested.