Getting out at the top
The owners of Ivanhoe Australia have picked the right time to bail out as the IPO debuts at a massive discount.
The IPO of Ivanhoe Australia, one of the few sizeable floats from the past 12 months, has had a disappointing debut on the ASX as the heat comes out of the Asian economies and the resources sector. It turns out to have been a good time to sell.
Ironically, UBS is believed to have won the lead manager mandate after the previously appointed Macquarie group presented a less bullish valuation of the company to Ivanhoe.
Ivanhoe Australia, which has widespread copper, gold and uranium exploration tenements around Mount Isa and Cloncurry in Queensland raised $125 million in its IPO after its Canadian parent Ivanhoe Mines sold a 20 per cent stake.
But the shares, sold for $2 to 576 investors, including at least 20 institutions, quickly slumped to a low of $1.50 each on its ASX debut on Wednesday, cutting the market capitalisation of the company to $470 million from $525 million.
The IPO costs were a relatively robust $10.3 million, including a $6.25 million fee for the lead manager UBS, which included a 4.5 per cent lead management fee and a 0.5 per cent incentive fee. ABN Amro Morgans played a subsidiary role, receiving a management fee of just $100,000 plus 1.25 per cent of whatever shares it sold.
Minter Ellison did the legal work for $1.2 million, while Deloitte Touche Tohmatsu received $536,000 for its audit and investigating accounting work.
Ivanhoe Australia used $38 million of the proceeds to repay an inter-company loan to its parent company, with the rest earmarked for exploration and development.
Ironically, UBS is believed to have won the lead manager mandate after the previously appointed Macquarie group presented a less bullish valuation of the company to Ivanhoe.
Ivanhoe Australia, which has widespread copper, gold and uranium exploration tenements around Mount Isa and Cloncurry in Queensland raised $125 million in its IPO after its Canadian parent Ivanhoe Mines sold a 20 per cent stake.
But the shares, sold for $2 to 576 investors, including at least 20 institutions, quickly slumped to a low of $1.50 each on its ASX debut on Wednesday, cutting the market capitalisation of the company to $470 million from $525 million.
The IPO costs were a relatively robust $10.3 million, including a $6.25 million fee for the lead manager UBS, which included a 4.5 per cent lead management fee and a 0.5 per cent incentive fee. ABN Amro Morgans played a subsidiary role, receiving a management fee of just $100,000 plus 1.25 per cent of whatever shares it sold.
Minter Ellison did the legal work for $1.2 million, while Deloitte Touche Tohmatsu received $536,000 for its audit and investigating accounting work.
Ivanhoe Australia used $38 million of the proceeds to repay an inter-company loan to its parent company, with the rest earmarked for exploration and development.
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