Shares in Spotless (SPO) rose 9.1% in their first day of trading following a $994.6 million initial public offering.
At 1201 AEST Spotless shares were up 15 cents at $1.75 compared to their IPO price of $1.60 a share.
The IPO was seven times oversubscribed with $7 billion of orders from investors around the world. The co-lead managers of the IPO, Citigroup, Deutsche Bank and UBS, together with Spotless’ adviser Highbury Partnership, decided to price the IPO where there was ample support and demand for the shares in the secondary market.
UBS is acting for 30 days as the stabilization manager of the stock. If Spotless shares threaten to fall below $1.60, UBS will indicate on trading screens that it is buying the stock as the stabilisation agent.
“Such purchases may have the effect of stabilising the trading price for shares on the ASX at a level higher than may otherwise have been the case in circumstances where the trading price is at or below the final price,” says the Spotless prospectus. Still, the prospectus warns UBS could also be a seller.
“During the stabilisation period, the stabilisation manager may resell some or all of the shares so purchased,” says the prospectus. “This resale may also affect the trading price of shares. For example, this may have the effect of creating a lower price than may otherwise have been the case, although the stabilisation manager is not able to resell shares for less than the final price in these circumstances.” Spotless also warns its shares could fall below $1.60 during the 30 days UBS acts as the stabilization manager.
The outsourcing company was listed on the ASX for the five decades between 1961 and 2012. Almost two years ago it was the subject of a leverage buyout by Pacific Equity Partners. PEP's shares are held in escrow until Spotless reveals its 2015 earnings.