‘Obnoxious pricing’ scuppers private equity IPOs
Initial public offerings (IPOs) for "good companies" owned by private equity firms are being passed over by fund managers, due to "obnoxious pricing".
Speaking at an Australian Unity hosted event in Sydney, Platypus Asset Management chief investment officer, Don Williams, said that while valuations for most IPOs were "pretty good", a number were overpriced.
"Towards the end of last year there was some obnoxious pricing from some IPOs, and typically those didn't get away," he said.
"We passed on a lot of IPOs that were good companies, because we just thought the pricing was obnoxious, and it won't surprise you to hear that most of those were coming out of private equity."
While Williams was critical of the offerings being made by private equity firms, he said existing stocks offered plenty of room for stock-pickers to prosper going forward.
"The thing that's interesting about the Australian market, even though it's been tracking sideways for longer than we'd like it to, there are still really good opportunities," he said.
"From our point-of-view, last year was a pretty good year for stock-pickers, and as long as you can ignore the index you can still make money in Australian equities."
AUTHOR
Nicholas O'Donoghue
Recommended for you
Infrastructure assets are well-positioned to hedge against global uncertainty and can enhance the diversification of traditional portfolios with their evergreen characteristics, an investment chief believes.
Volatility in US markets means currency is becoming a critical decision factor in Australian investors’ ETF selection this year.
Clime Investment Management is overhauling the selection process for its APLs, with managing director Michael Baragwanath describing the threat of a product failure affecting clients as “pure nightmare fuel”.
Global X will expand its ETF range of exchange-traded funds next month with a low-cost Australian equity product as it chases ambitions of becoming a top issuer of ETFs in Australia.
