Steel & Tube deal a sign the market's not asleep

Firm that underwrote sale of Arrium's majority stake says it defies views the New Zealand equity market is a shell of itself, moribund or asleep.

The broking firm behind the Steel & Tube deal says the quick sale of ASX-listed Arrium’s majority stake in the materials supplier is a sign the market is alive and well.

Craigs Investment Partners sold mining and mineral company Arrium's 50.3% stake,  fetching $91.2 million, within two hours after the market closed on Tuesday.

“That’s not a market that’s asleep,” says Craigs’ head of equity capital markets John Moore.

The shares were sold to a selection of New Zealand institutional shareholders at $2.05 a share yesterday.

Mr Moore said the transaction defied views the New Zealand equity market is a shell of itself, moribund and asleep.

“People have queried whether or not the market will stand up to a Mighty River Power float.

“There’s a lot of investment money in New Zealand … far too much of it is sitting in bank accounts, lots in property too, and it is actually looking for a home and equities that pay yields out there in the market.”

Mr Moore said the transaction had returned a good New Zealand asset back to New Zealand investors.

“Many say, oh dear – here’s another Aussie institution dumping a New Zealand asset.

“Instead, this is a good New Zealand asset back in New Zealand hands.”

Although the $2.05 sale price was a 37% discount to the market price at the time, Mr Moore says it needed to be recognised Arrium’s sale was a significant event, which had transformed Steel & Tube’s share register.

Shares in Steel & Tube had been thinly traded, without much institutional following.

The company had now set itself up for a return to the NZX50 index, which would generate more interest in the company.

Steel & Tube shares dropped 8.3% yesterday to $2.22 – 17c above the deal price.

Mr Moore says a fall in the share price was to be expected after the deal.
 

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