KMD - Kathmandu

[Balance]

Sp now at $1.55. With flat retail sales as indicated by WHS and MYR will be testing times for alternative clothing stores. Trading at a high PE, one wonders if KMD can meet forecast. We saw what happen to PPL sp when they miss forecast.

Those that have been saying.... Great IPO... Yeah right mate.

Get over it, Dr Who.

Great IPO for Private Equity Investors.

Great IPO for Staggers.

Lousy IPO for Ozzie investors, so great IPO for NZers who took a quick profit.

How often do you get an IPO where you can get all the stock that you want and flick it out in volume for a nice profit day 1 and day 2?

No point stating the obvious about KMD missing forecast - all stocks get punished if they miss forecast, some more than others. Tell us what will happen if KMD exceeds forecast - what will happen?

[minimoke]

Get over it, Dr Who.

Great IPO for Private Equity Investors.

Great IPO for Staggers.

Lousy IPO for Ozzie investors, so great IPO for NZers who took a quick profit.

How often do you get an IPO where you can get all the stock that you want and flick it out in volume for a nice profit day 1 and day 2?

No point stating the obvious about KMD missing forecast - all stocks get punished if they miss forecast, some more than others. Tell us what will happen if KMD exceeds forecast - what will happen?

Before we get too carried away lets remember that demand for this IPO was weak - hence its low listing price. The indicative price range was AUD$1.65 to $1.90 but listed at $1.70.

The Private Equity investors would have been happy enough with this price - but it wasn't as good as they would have liked.

Staggers made a profit - but 4% (less brokerage fees and tax) didn't, IMO, reflect the risk atttached to this listing. Especially off the back of Meyers listing which, as I recall ended their first day down 8%.

As for investors - this has been in downwood trend since day three of listing.

I'm struggling to see how this could be described as a "great" IPO in any sense of the word.

[macduffy]

Only in the sense of a successful stag - as Balance keeps on telling us!



But the company is listed, adds some additional (moderate) depth to the market. Now has the job in front of it to attract long term investors.

[Balance]

Before we get too carried away lets remember that demand for this IPO was weak - hence its low listing price. The indicative price range was AUD$1.65 to $1.90 but listed at $1.70.

The Private Equity investors would have been happy enough with this price - but it wasn't as good as they would have liked.

Staggers made a profit - but 4% (less brokerage fees and tax) didn't, IMO, reflect the risk atttached to this listing. Especially off the back of Meyers listing which, as I recall ended their first day down 8%.

As for investors - this has been in downwood trend since day three of listing.

I'm struggling to see how this could be described as a "great" IPO in any sense of the word.

Question of reading the tea-leaves.

Risk attached to the listing? Read thru' the thread - everyone got so negative that the IPO was going to be priced right fort a stag. And you can get as much stock as you want - not often with IPOs do you get that privilege. No brainer there.

Private Equity made 300%+. So they did not make 350%. Big deal!

As for investors - they were warned, weren't they?

[minimoke]

Question of reading the tea-leaves.

Risk attached to the listing? Read thru' the thread - everyone got so negative that the IPO was going to be priced right fort a stag. And you can get as much stock as you want - not often with IPOs do you get that privilege. No brainer there.

Private Equity made 300%+. So they did not make 350%. Big deal!

As for investors - they were warned, weren't they?

As I recall, JC got around NZ$275 for her 51% and 49% tranches. At listing these canny Private equity investors got NZ$426m so I’m not sure how it’s figured they made 350% on their investment. $426m less listing fees ($20m??) less the AUD$40m I’m sure they would have liked if the issue price was $1.90 less what they have borrowed / spent growing KMD since the ’06 buyout. No public offering and no uptrend in price – despite overall AUX / NZX market improvements since then. I reckon the Private Equity investors were well pleased to get out with what they did.

I don’t reckon its reading the tea leaves. I reckon it’s a lucky break by some punters who were swayed by their brokers and given a mere 4 hours on day one to quit their holding. Sure the stags (only 10% of shares held by NZ’ers) made a “profit” but not of a size I’d be crowing about as the coin could so easily have fallen on the other side.

[Balance]

As I recall, JC got around NZ$275 for her 51% and 49% tranches. At listing these canny Private equity investors got NZ$426m so I’m not sure how it’s figured they made 350% on their investment. $426m less listing fees ($20m??) less the AUD$40m I’m sure they would have liked if the issue price was $1.90 less what they have borrowed / spent growing KMD since the ’06 buyout. No public offering and no uptrend in price – despite overall AUX / NZX market improvements since then. I reckon the Private Equity investors were well pleased to get out with what they did.

I don’t reckon its reading the tea leaves. I reckon it’s a lucky break by some punters who were swayed by their brokers and given a mere 4 hours on day one to quit their holding. Sure the stags (only 10% of shares held by NZ’ers) made a “profit” but not of a size I’d be crowing about as the coin could so easily have fallen on the other side.

Ok, it's clear you have no idea how private equity deals work so watch the numbers dance for your pleasure.

$275m was funded by capital/equity of $78m and debt of $197m.

The PE investors received $316m from IPO = $426m less listing fees of $15m & KMD received $85m.

$316m divided by $78m = 300%+ profit.

Tea leaves were easy to read if you care to read carefully. The ozzies loved this IPO and KMD made KMD an index stock in both ASX and NZX, ensuring after market support. After the disappointment of Myer, KMD was going to be priced by the institutions 'cheap'.

[Sideshow Bob]

$426m - $15m - $85m = $326m.

But whatever the profit, then they have to pay back the $197m debt??

[Balance]

$426m - $15m - $85m = $326m.

But whatever the profit, then they have to pay back the $197m debt??

What's $10m between JC and the PE investors?

The debt is left in KMD and reduced by the $85m mentioned above. It has also been reduced by cash flow generated by KMD in the last 3 years.

That's how PE works. Magic, huh?

Mind you, the PE investors in Yellow Pages and Independent Liquor are probably sitting on multi-billion dollar losses.

[whatsup]

What's $10m between JC and the PE investors?

The debt is left in KMD and reduced by the $85m mentioned above. It has also been reduced by cash flow generated by KMD in the last 3 years.

That's how PE works. Magic, huh?

Mind you, the PE investors in Yellow Pages and Independent Liquor are probably sitting on multi-billion dollar losses.

Romoured to be around $550 mil in Independent Liquors case but then again its most probably a limited liability vehicle partnership in which case the original "seed " money -$100mil, from the PE investors is "lost" and the real leverage investment is left with the fianancer!

[minimoke]

Ok, it's clear you have no idea how private equity deals work so watch the numbers dance for your pleasure.

$275m was funded by capital/equity of $78m and debt of $197m.

The PE investors received $316m from IPO = $426m less listing fees of $15m & KMD received $85m.

$316m divided by $78m = 300%+ profit.

Tea leaves were easy to read if you care to read carefully. The ozzies loved this IPO and KMD made KMD an index stock in both ASX and NZX, ensuring after market support. After the disappointment of Myer, KMD was going to be priced by the institutions 'cheap'.

I don't have the PE figures - but I have no doubt they were happy enough with this particular listing. But my point being that they would have preferred a listing at $1.90 - making another $40m on their original $78m. There probably is something to be said for " a bird in the hand...."

The Ozzies may have loved this listing - but are probably rueing the decision as they have seen their investment fall 10% in a month or so and those keen buyers in the first few days have dropped more. I can't see much advantage being an index stock if playing this one is like catching a falling knife. Good luck to buyers in the short term. Those that bought MYR after listing would probably be less unhappy.

As an aside, wouldn't the PE owners have paid off some of their debt over the past few years?