On Monday, the owners of the company announced that the 200 million shares being sold would be listed in Australia and New Zealand, with the final price to be set on November 12 after a book build process with institutional shareholders.
An indicative range of $A1.65 to $A1.90 or $NZ2.01 to $NZ2.32 was given.
Private equity investors GoldmanSachs JBWere and Quadrant Capital, who bought the company from founder Jan Cameron, will either sell down to 15% or exit, depending on demand.
Mr Timms said having the initial public offering (IPO) was great for the market and it showed the owners had confidence the market would accept an IPO.
"But it comes down to pricing.
"How much is there left for shareholders to buy back in; how much growth is left in the business?" Mr Timms said.
If the owners left the company completely, investors should also ask where their money was going if they took up the offer, he said.
Was it to pay out the owners or was it to pay down debt and push the business forward?
The market was littered with failed IPOs that came out of private equity firms although some, like Freightways, had done well, Mr Timms said.
Kathmandu was "robust" in New Zealand's retail sector, it had good brands and good stores.
"You have to look at what the owners have done to enhance the business since they bought it and to reach this exit point," he said.
At July 31, Kathmandu had 82 stores across Australia, New Zealand and the United Kingdom and had plans to open 12 new stores in Australia and New Zealand during this financial year.
Chairman James Strong said the company had identified 70 locations in Australia and New Zealand to assess for suitable store sites.
Sales had increased from $151 million in 2007 to $216 million this year. Kathmandu was forecasting 2010 sales of $240 million and operating earnings of $57 million.
The company had undergone a transformation during the past three and a-half years, with significant investment in new stores, IT systems, distribution centres and its people. A dual stock exchange listing was the logical next step for the company's growth plans, he said.
The offer was expected to gross $338.6 million to $457.2 million with the listed entity set to have a market capitalisation of $402 million to $463 million. The price is between 13 times and 15 times earnings and the dividend payout ratio is 55%.
The private equity consortium paid about $300 million for the business in 2006.
The retail offer runs between October 27 and November 6 with an institutional book build on November 10 to November 11.
• AT A GLANCE
Biggest IPOs since 2005:
> GoldmanSachs, JBWere's private equity arm and Quadrant Private Equity will sell up to 99% of Kathmandu in an initial public offer raising between $338.6 million and $457.2 million.
> 197.4 million shares will be offered at $2.01 to $2.32.
> It is the biggest IPO on the NZX since Vector raised $592.6 million in 2005.
> Kathmandu will have net debt of $70 million after the IPO.
> Management, who now hold 2%, are expected to end up with about 1.3% of the company.
> The company was acquired by its current owners from founder Jan Cameron in 2006 for about $300 million
