Steady start for Summerset

After an encouraging start to NZX trading, shares in market newcomer Summerset have slipped below their issue price of $1.40. 

Shares in the retirement village operator opened at $1.45 when trading began on the NZX main board at 12pm today. However, by 3pm the stock had fallen back to $1.38. 

In the three hours of trading some 1.6 million shares worth $2.3 million changed hands. 

Grant Williamson, a broker with Hamilton Hindin Greene, said there had been good two-way interest in the shares, both on the buying and selling side.

The company was a welcome addition to the stock exchange, he said.

Summerset’s initial public offering (IPO) saw 44% of the company floated, which raised $123.6 million. 

Australia’s Quadrant Private Equity  reduced its stake in Summerset from 97% to 56% with $50 million of new capital also being raised. 

Summerset is the country’s third largest retirement village operator with 13 operational villages across the country providing services to 1700 residents.





The company is forecasting pro forma net operating cashflow of $51.9 million and total investment properties worth $632.6 million for the financial year ending December 31, 2012.





It expects underlying profit after tax of $6 million this financial year, rising to $9.7 million in 2012.

Summerset chairman Rob Campbell said the IPO was a significant event for investors and the company.

“The strong interest from investors indicates the willingness to support businesses with strong fundamentals, and in particular those like Summerset that have consistent underlying earnings and growth prospects largely unaffected by the volatility in international markets.

"The IPO provides positive encouragement for New Zealand’s capital markets which can only have long term benefits for individual companies and the economy.”

Summerset has a market capitalisation of just over $310 million.

Summerset chief executive Norah Barlow said the company was on track to deliver more than 250 units over the next two years and had the landbank to double its size in future years.

Of the $123.6 million raised, $50 million has been put straight back in to Summerset to fund and support its growth plans.