Van Eyk gives Promina thumbs-up

Investors are being urged to participate in the initial public offering (IPO) of financial services group Promina in May withvan Eyk Researchstating it to be an attractive offer despite uncertainties over the opening stock price.

Van Eyk head of investment research, Tom Cottam says an assessment of the prospectus puts Promina above existing market participants, IAG and QBE, in terms of recommendation.

“By taking an overview of the figures we believe on a prima facie basis the statistics for Promina look better than IAG and QBE,” Cottam says.

Van Eyk has ‘neutral’ and ‘attractive’ ratings on IAG and QBE shares respectively.

However Cottam identifies one problems facing the Promina issue as the wide range of potential starting price scenarios, due to the fact the IPO came to the market at a period when markets were highly uncertain i.e. At the beginning of the war in Iraq.

“If the market starts to edge up then that will be bad news as the offering will be priced at the upper end of the range, and that will put the yield down at around 5 per cent, but if the market weakens then it is likely the yield will be up at around 6.8 per cent,” Cottam says.

Yet Cottam argues even at the upper end of the pricing scale Promina stock will still be attractive to investors.

Promina will attempt to raise up to $2.1 billion from the listing, through its offer of 1.057 billion shares at a maximum of $1.90 each - with 900 million shares available under the offer and a further 157 million shares available through an over-allotment option.

Retail investors, who may be eligible for a 10c per share discount, will have a minimum allocation of 1000 shares, with the refund returned after the institutional book build closes on May 9.

Pre-registered customers of Promina will be guaranteed a minimum allocation up to $5000 while non-customers who also pre-registered will be guaranteed a minimum allocation of up to $3500.