sealink travel ipo closes early, page-20

SeaLink debut shows appetite for IPOs

Criterion
The Australian
October 16, 2013 12:46PM

SPLICE the mainbrace me hearties! This one's taking off with a wet sail.

Following currency intermediary OzForex's stunning debut last week, SeaLink Travel Group (SLK, $1.52) this morning went one better by listing at a 38 per cent premium to its $1.10 offer price.

"I couldn't be happier," chief executive Jeff Ellison says. "It's terrific to see the support for the company. We ran a sweep (on the opening price) and no-one got near that number at all.''

The runaway debut sends a further signal that the market is receptive to proposed upcoming IPOs, notably that of the Nine Network.

Still, there's a danger in being too prescriptive and we can't conveniently forget the iSelect float was a stinker.

In the case of SeaLink, which operates the monopoly Kangaroo Island ferry service, Captain Cook Cruises and hops to Magnetic Island and Palm Island, a number of positive circumstances coalesced.

Firstly, the IPO involved only 15 million shares being issued to raise $16.5 million, with the original holders accounting for 55 million shares not selling down.

Secondly, the 23-year old SeaLink has a solid earnings track record and the raising was struck on a reasonable multiple of ten times forecast current-year earnings of $7.7m.

Thirdly, there's no similar listed exposure, which confers rarity value.

While Ellison expected only three or four instos to participate, 28 fundies ended up subscribing to the oversubscribed offer. These are understood to include blue-chip stalwarts Perpetual, Perennial and BT.

Ellison says SeaLink will employ its bolstered balance sheet to pursue further acquisitions, having subsumed 13 businesses over 14 years.

Criterion was happy to board this one in the IPO and good luck to any landlubbers who got in with the action.

For others, the ship may have sailed already. Our call is under review pending further news from the crow's nest on SeaLink's likely course.
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