All eyes are on whether dual-listed Kathmandu stock begins trading today on the New Zealand and Australian bourses at its $A1.70 issue price, or, like the recent almost $A2.4 billion Myers department store float on the ASX, fails to trade at its bookbuild price.
The Kathmandu shares were offered at an indicative price range of between $A1.65 to $A1.90, but the mainly institutional buyers settled on buying in at $A1.70.
The lower price means about $A40 million less for Kathmandu's owners, the Quadrant Private Equity and Goldman Sachs JB Were Principal Investment Area using a company called Milford.
However, from the $NZ426 million raised, Milford will take it all; in $NZ15 million fees, $NZ85.7 million to pay Milford debt, plus the balance of $NZ325 million to Milford; leaving $NZ70 million of debt on Kathmandu's balance sheet.
Kathmandu was purchased from founder Jan Cameron in 2006 for $A225 million by Quadrant Private Equity and Goldman Sachs JB Were, which is exiting its stake entirely.
Kathmandu chief executive Peter Halkett said in a statement yesterday the price reflected the strength of the business and an understanding of the growth strategy.
"We are delighted with the success of the offer, which will provide us with a high quality share register," Mr Halkett said.
In Myers' issue, its shares were floated at $A4.10 and opened at $A3.88 on the first day of trading, closing at $A3.75.
During the past week its shares have been trading in a $A3.75 to $A3.90 range.
Craigs Investment Partners broker Chris Timms said investors were concerned there could be a repetition of the Myers experience.
"There hasn't exactly been a queue of investors lining up for Kathmandu stock," he said.
"Investors have to to be aware of where the money is going, what's left in the company and what the upside will be for them," he said.
Forsyth Barr broker Suzanne Kinnaird also scrutinised the risk factors in the Kathmandu float and its prospects further out, giving an initial valuation of the stock at $A1.86"The company has good growth potential in Australia and further afield, but that is not without risk.
Just look at Pumpkin Patch as an example of a company struggling to expand in the United Kingdom and United States.
"The retail sector locally and internationally remains a tough place to be at present," Ms Kinnaird said.
Mr Timms said concerns had been raised in Australia about the state of its retail sector and also statements from Ms Cameron in recent weeks that she intended re-entering the outdoors goods retail market in competition with Kathmandu, after a restraint of trade expired in May 2011.
"Hopefully, choosing Black Friday to launch on markets isn't a bad sign. It will be a good day for Kathmandu if it can close at the issue price of $A1.70," Mr Timms said.
Kathmandu was set up in New Zealand 22 years ago and has since enjoyed significant growth.
It has opened 36 new stores since its takeover in 2006 and now has a total of 85 stores in Australia and New Zealand, and six in the UK.
It has plans to open 12 new stores in Australia and New Zealand in fiscal 2010 and has also identified another 70 locations suitable for store sites.
• Kathmandu is coded KMD on the NZX and its shares are expected to begin trading at 1pm today.
