SML - Synlait Milk Ltd

[macduffy]

I agree, 1leon, I've never been invited to suggest a price. But it's the parties to the bidding process, ie the brokers and other instos, who bid their prices and get allocated blocks of shares. After that, we're in their hands as to how many they allocate individual investors.

Of course, it's also in the interests of the company to ensure a healthy market for the shares once they're listed. So there is a tension between the company's interests and those of any shareholders selling into the issue. Depending on the level of their holding, post issue, they will also have a keen interest in the performance of the shares, once listed.

[1leon]

No, price was not mentioned,just the total amount we wanted to invest.
I have received the prospectus today,and have to let my broker know on Monday should I decide not to go ahead.

Thanks Percy. Clearly then brokers are, as I have always understood, bidding on basis of volume they want and that clients are prepared to pay wherever the price falls based on indicative range.

[FarmerHamilton]

Thanks Percy. Clearly then brokers are, as I have always understood, bidding on basis of volume they want and that clients are prepared to pay wherever the price falls based on indicative range.

I don't want to be seen to be greedy but we are a little disappointed at $2.20 given the level of interest which appears to be out there. Just to diversify a little we are selling 40% of our holding in the IPO ( also the escrow feature meant if you were a big holder then you could only sell $300k worth in the next 15 months ) so to play it safe we decided to sell some and have the option to sell a few more post listing.
I will be buying stocks like Coca-Cola,Colgate Palmolive,Bristol Myers and Eaton for instance with the proceeds.
Will probably keep 125,000 Synlait Milk for long term along with same number of Synlait Farms. Will sell gradually as values increase in 10% increments, however won't start selling any more SML until $2.80

[percy]

I don't want to be seen to be greedy but we are a little disappointed at $2.20 given the level of interest which appears to be out there. Just to diversify a little we are selling 40% of our holding in the IPO ( also the escrow feature meant if you were a big holder then you could only sell $300k worth in the next 15 months ) so to play it safe we decided to sell some and have the option to sell a few more post listing.
I will be buying stocks like Coca-Cola,Colgate Palmolive,Bristol Myers and Eaton for instance with the proceeds.
Will probably keep 125,000 Synlait Milk for long term along with same number of Synlait Farms. Will sell gradually as values increase in 10% increments, however won't start selling any more SML until $2.80

I too would be very disappointed receiving $2.20.

[zigzag]

I received my prospectus in the mail today. Quite a comprehensive document. Page 178 gives a reasonable description of the book build process. I allowed $7000.00 for 3000 shares, so price is a little less than I was expecting. Perhaps they want to ensure a successful float, and some happy new shareholders. I look forward to July 23.

[FarmerHamilton]

I am long my holding at an effective 41c so although 220c might be a tad low we are still pretty pleased.

[1leon]

I agree, 1leon, I've never been invited to suggest a price. But it's the parties to the bidding process, ie the brokers and other instos, who bid their prices and get allocated blocks of shares. After that, we're in their hands as to how many they allocate individual investors.

Of course, it's also in the interests of the company to ensure a healthy market for the shares once they're listed. So there is a tension between the company's interests and those of any shareholders selling into the issue. Depending on the level of their holding, post issue, they will also have a keen interest in the performance of the shares, once listed.

Here the "tension" was somewhat more complicated. The bulk of the IPO was by far coming from new allocation, not existing selling in. Further even those selling in could hold back $300,000 to sell on listing and were only restrained about a year on holdings retained above that level. If in fact this issue was grossly oversubscribed it did not require listing at the bottom of the indicative range to ensure a healthy market. The complicating factor here is that we do not have any idea how many shareholders are waiting to throw their $300,000 worth in on listing.I wonder whether the real answer is that the institutions were reluctant to go above $2.20 even though private clients with no access to the numbers wereprepared to go to $2.65.The reported suggestion that FrieslandCampina bid vigorously seems to hint other institutions weren't keen to even bid that far.

[FarmerHamilton]

There are probably only about 40 shareholders who own $300k + so the amount that might be still to be sold is a maximum of about $12m .... discl. me included

[mcdongle]

Hi 1leon, I was asked what price i was prepared to pay for the shares by F Barr for the wife. we had a chat and decided $25000 at $2.65 and $25000 at $2.15 so i was guaranteed some but they were scaled back and she got 4500
My other broker for myself i just went in at $2.65 thinking i would be scaled but somehow i wasn't [and he wont tell me how] and have coughed up $50000 which i was not expecting so i hope they go up.

[1leon]

There are probably only about 40 shareholders who own $300k + so the amount that might be still to be sold is a maximum of about $12m .... discl. me included

I have perhaps also overlooked smaller holders who have sold down part and of course there may also be staggers wanting out.
It is interesting to compare the sell down of Synlait Milk and Synlait Farms holders. My rough mental arithmetic suggests a sell down in excess of 11% in Synlait Milk but since Synlait Farms arrived on Unlisted in May there have been sales of less than 1% in Farms shares. And Synlait Farms has generally lacked sellers more than buyers. Does this suggest that the original shareholders are happier staying in the farms than the processor and do not have the same confidence on Synlait Milk projections?
Discl. bought Synlait Farms but do not have allocation of Synlait Milk