Gio Tops New Listings
The Age
Thursday July 23, 1992
The underwriters of the $1.2billion float of GIO Australia were net sellers of GIO shares yesterday as the former New South Wales Government-owned insurance office listed at a lower-than-expected premium.
GIO shares opened at $2.68, a 28-cent premium to the $2.40 issue price, but quickly settled into the $2.52 to $2.54 range, where most of the trade was done. It closed at $2.52.
About 17.8 million shares, about 3.6 per cent of GIO's capital, worth $45 million changed hands.
This would have disappointed the stags, who were hoping for a listing price of up to $2.90 after the GIO issue was $1 billion oversubscribed in less than two days.
Market falls since the issue closed on 30 June had prompted some brokers to lower their expectations to $2.50-2.60.
But GIO, headed by the managing director Mr Bill Jocelyn, was still the most successful debutante yesterday. Southern Cross Airlines, whose $50 million issue was only half filled, opened at 45cents and closed at 40 cents, a 20 per cent discount to the 50 cents issue price. Only 333,000 shares were traded.
Southern Cross took over the remains of the failed Compass Airlines earlier this year, appointing the US-born Mr Sam Coats as the chief executive.
The Cooperative Building Society of South Australia opened and closed at $2.05, four cents below its last exempt market price of $2.09.
County NatWest Securities, which jointly underwrote GIO with Bain Securities and Potter Warburg, was a net seller of 2.7 million GIO shares, market sources said.
A member of the retail broking group organised by County and Bain, the Perth broker Hartley Poynton, was the biggest net seller with 3.5 million shares.
Bain was a net seller of about 800,000 shares, although a spokesman said the firm had traded both ways and bought about three million shares. Potters were down the list of net sellers, selling about 80,000 shares.
Firms in the retail broking group had complained about their allocations being scaled back, but the Sydney broker Dicksons was the only one to buy. Dicksons bought a net 700,000 shares.
BZW Australia was the biggest net buyer with 2.5 million shares.
Brokers said the narrow premium was disappointing. ``I think it was a little bit disappointing the way the stock was pushed down at the end," the Bain spokesman said. ``Maybe it's because there was so much pre-float publicity built up in the media." Another broker said pessimistic overseas investors had failed to pick up shares, and many local investors were upset at being scaled back.
The institutions did not enter the market in force yesterday to build marketweight holdings. Brokers expected more institutional buying now that the price has settled down, which they said should push the price along.
One broker said the narrow premium showed that the open-price tender system used for the first time in Australia to set the price for the GIO issue was perhaps ``a little opportunistic", given that investors traditionally expected a 10 to 12 per cent premium on listing.
© 1992 The Age