NZX likely to bag Trade Me float

A partial float of the Trade Me online auction business on NZX seems the most likely outcome of a review of the business by owners Fairfax Media, analysts say.

But they said it was early days and investor interest would depend, as always, on the price.

Fairfax Media's general manager for investor relations Frank Sufferini said Trade Me was being reviewed alongside other parts of the firm's business, Radio New Zealand reported.

Fraser McLeish, analyst at RBS Australia, said the asset's value was not being reflected in the share price of the parent company.

The most likely method of sale was a initial public offer of 49 percent of the company on the NZX.

"It sounds like they are looking at options. I don't get the impression that any decision has been made," Mr McLeish said.

"I think it is right to look at options when you have an asset like that, which isn't being properly valued in the share price," he said.

James Smalley at Hamilton, Hindin, Greene said there would be interest in a listing of Trade Me but it would depend on the price the shares were offered at compared to earnings.

The successful listing of LinkedIn in the United States in May had shown that there was demand for internet companies.

"Usually when there is a new listing people don't really know who they are or what they do, but that won't apply to Trade Me. The attractiveness depends on what multiple they put it on, but internet-based things are flavour of the month," he said.

The LinkedIn shares soared as much as 171 percent when they began trading on the New York stock Exchange, sparking a debate about investment bubbles and the expectations placed on companies by soaring share prices.

Sam Morgan, who was appointed to the Fairfax Media board in 2010, sold Trade Me in 2006 for $NZ700 million. Mr McLeish currently values the business at $A1.1 billion ($NZ1.43 billion).

Trade Me increased earnings before interest, tax, depreciation and amortisation by 8.3 percent to $NZ47.7 million in the six months to December 26 on a revenue increase of 11.1 percent.

Costs increased as the business invested in customer services and product development.

Trade Me is the leading internet business in New Zealand, accounting for 70 percent of .co.nz internet traffic, according to a Fairfax Media presentation.

The review of Trade Me was said to be less advanced than recently announced plans to sell off Fairfax's radio division.

Fairfax stock has been in a holding pattern since the start of 2009 after widespread concerns about the structural challenges facing newspaper publishers as readers and advertisers migrate to online platforms.