The world's first publicly listed fertility services business Virtus Health has made a strong debut on the Australian Securities Exchange, closing 9 per cent ahead of its listing price and opening the window for a raft of public float hopefuls.
Virtus shares, which trade under the ticker code VRT, opened at $6.07, jumping 52¢ to close at $6.20 – a 9.15 per cent increase over its listing price of $5.68.
This made for a big pay day for 160 institutional shareholders as well as its doctor-owners.
Frank Quinn, a clinical director of IVF Australia Northshore and Central Coast Clinics, holds a 1.1 per cent stake in Virtus. He made gains of $457,748 after the first day of trade. It is believed that Dr Quinn did not sell all his allowable stock into the initial public offer and is one of the group's highest IVF cycle contributors.
About 20 per cent of shares traded hands on Tuesday pushing Virtus' market capitalisation to $493 million. Virtus, the biggest float of the year excluding dual-listed Mighty River Power, was sold by Quadrant Private Equity while owner-doctors retained 23 per cent of the listed entity.
It represents the most high profile Australian company this year to take advantage of a turnaround in global equity markets. Industry sources said Latrobe Fertilisers is preparing for an IPO after attracting a large Chinese investor to help build its planned $2 billion Latrobe Valley project in Victoria.
Encouraging for other floats
Watermark Market Neutral Fund has lodged a prospectus for its $120 million IPO, while insurance broking business Steadfast and logistics specialist McAleese Transport are also slated to come to market.
UBS head of equity capital markets Simon Cox, who along with Morgan Stanley were joint lead managers, said the success of Virtus was encouraging for other floats in the pipeline.
"I think if you come to market with the right product and it's fairly priced, investors will have confidence coming into other IPOs," he said. "This transaction is making money so investors would feel more inclined to participate in future floats. But each opportunity will be taken on its merits."
Just 44 companies listed on the stock exchange in Australia in 2012, less than half the 103 that floated in 2011 and well down on the almost 250 companies that rushed to go public in 2007 before the financial crisis struck.
Virtus, which provides IVF services, gynaecological and obstetric ultrasound scanning and procedures, and day hospital procedures, has bucked the trend of other local IPOs in recent years with Collins Foods, Calibre, and Myer all closing below their issue price following their listings on the ASX.
Boost sentiment towards private equity
Quadrant managing director Chris Hadley said the positive debut of Virtus should boost investors' sentiment about assets sold by private equity, which has been tainted by poor performance post-float. Perpetual deputy head of equities Charlie Lanchester said there are no "hard and fast rules with IPOs" and pending floats will gain interest depending on the types of ¬businesses and valuations.
"We access every IPO on its merits and we thought Virtus was a good one which was the first PE float of reasonable quality for a while," said Mr Lanchester, who is a top three shareholder in Virtus.
"It's a relatively low risk business that seems to be well managed and has growth ahead of it."
Virtus's list of top 20 shareholders is said also to include local fund managers BT Funds Management, AMP Capital, JCP Investment Partners and Perennial Value. There are also a few dedicated specialist healthcare funds from the United States and United Kingdom.
(First published in The Australian Financial Review, Jun 12th 2013)
Writen by Global Administrator, 14/03/2016 News