By Tony Field
Only a small number of TradeMe’s most active users will be among those offered shares in the company, ahead of its listing on the stock market next month.
Fairfax is selling one third of the company at $2.7 a share, to raise $350 million.
One million people log onto TradeMe every month and today they had a chance to check out the prospectus for the TradeMe share float.
But less than 3 percent of them – 28,000 – are being offered shares by the website.
“Our biggest, most active members receive a priority offer. That means if you have 500 feedback, or you are on of our top sellers, you can apply directly,” says TradeMe chief executive Jon Macdonald.
Shares are also being offered to staff at TradeMe and Fairfax and to Fairfax shareholders.
But the majority are going to big institutions like KiwiSaver funds, or to clients of the brokers involved in the float.
“It’s such a well-known New Zealand brand, if you look at the company itself; it’s profitable, it’s been profitable, it’s growth rates have been magnificent,” says Carmel Fisher of Fisher Funds.
Professional investors are divided over whether the offer price of $2.77 per share is a fair price, or too high.
That will be determined by whether TradeMe can maintain its growth rates, in a country where it is already the dominant player.
“Though this is a small country, small economy, as you look across the economy I am sure there are plenty of other opportunities for TradeMe to work its very distinctive style in other areas of the economy,” says business journalist Rod Oram.
The share price could also be affected by the continuing disruption that the European debt crisis is causing to world share markets.
“Regardless of the value of TradeMe, anything could happen in the next six months. So it is quite conceivable they might list for less than $2.70 – they might fall to $2.70 next year sometime,” says Fisher.
As experienced bidders know, even the most desirable product is only worth buying at the right price.
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