</B>Financial services companies have historically shown a minimal presence on the Australian Stock Exchange (ASX), but with a record number of groups listing last year, it seems 2000 was the year of arrival. Nicole Szollos looks into the financial services market offensive.
Results from the latest PriceWaterhouseCoopers (PWC) Survey of Sharemarket Floats released in February reveal a record number of financial services industry organisations listed on the Australian Stock Exchange (ASX) last year.
Out of 141 groups, eighteen were investment and financial services groups according to ASX industry sector categorisation. This is up by seven from last year’s numbers, and out of the eighteen there were eight financial services groups of varying descriptions that ended the year with varying results.
Representing financial planning companies; Harts Australasia, Beacon Financial Services, Fiducian Portfolio Services, Stockford and Count Financial all floated last year. They were joined by online financial services provider Sanford, financial services internet training group Worldschool and financial services media group InvestorInfo.
The Fiducian, Stockford, Count and Sanford floats in the latter part of 2000 all closed with successful results. Stockford’s share offer closed with a full subscription while Fiducian, Count and Sanford were oversubscribed.
Earlier on in the year, InvestorInfo, Worldschool, Harts and Beacon all floated in the same month.
Aside from the record number of financial services companies listing in 2000, PriceWaterhouseCoopers corporate finance and investment banking partner Greg Keys says the types of groups which listed reflects a change in business over the last few years.
“In previous years we have seen more investment funds, trusts and property groups while last year the vast majority have been true financial service businesses,” Keys says.
Corporate finance and investment banking director Michael Campbell confirms the trend.
“There were a number of companies which listed in 2000 that provide services in, and to, the financial services industry. This contrasts with the historical norm in previous years which was for floats to typically be limited to various types of investment vehicle, such as investment funds and trusts,” Campbell says.
Data included in the PWC floats survey is a market capitalisation figure from close of trading on the listing date, and a year end premium (absolute) figure calculated on 31 December based on the closing price of the stock. PWC analysts reviewed movement between the two, and generated further data for the survey. Keys reports the survey figures show that on average the companies that floated last year could list up to five per cent over their prospectus’s issue price.
Excluding investment and financial services floats, a significant proportion of companies that listed last year were small caps companies with a value of less than $100 million. According to the survey results, financial services groups returned a better overall share price performance than the small caps companies.
The median share price performance figure for the 18 investment and financial services floats was an absolute premium of -3.4 per cent, compared with -18.5 per cent for the small caps companies.
“The financial services groups have held their ground, with only marginally negative results,” Keys says.
Within these eight financial services groups, half had positive end of year absolute premiums while the other half returned negative results. Reasons for posting a negative figure range from general market limitations to more specific group structure and activities.
Last August online financial services provider Sanford Limited listed on the ASX and ended the year with an PWC survey absolute premium figure of -45.3 per cent.
Sanford chief executive Steven Goh says the negative result can be attributed to the state of the general market, which was effected by particular conditions at the time. Entering the market for the last four months of 2000 exposed the group to the Olympic period, and the seasonal low time of late October/early November when people don’t usually look at stocks so much, Goh says.
