Monday, May 3, 2010

Ecoya IPO lights only one end of the candle

Ecoya Ltd [ECO.NZ] lists on the NZX this morning, Monday May 3 2010, but it begins its public life with an underwhelming IPO that only just lit one end of a scented candle.

There was NZ$10.1 million raised out of a possible $13 million (if you include over-subscriptions) with 2.5 million shares allocated to insiders topping up the money raised.

The economy isn't exactly firing at the moment so it could be that overall negative feeling having an effect on capital raising.

Having said that, in the thick of stockmarket and economic turmoil in 2009 many capital raisings were done by NZX listed firms and most if not all were well sort after and heavily oversubscribed so it proves where quality and stability of earnings is on the positive side of the ledger there is an appetite for investors to plunk down money.

There has been a dearth of high quality IPOs for many a year on the NZX, and in the absence of Fonterra or some of the taxpayer owned electricity companies listing, the future for investing in public companies looks a little bleak.

Don't get me wrong there is room for the riskier investment proposition that Ecoya is, but everyday investors in the stockmarket like myself want to see good medium to large companies coming to market with a proven track record, good balance sheet, a good economic advantage and reasonable future prospects.

The market has proven that Ecoya is not one of those companies thus far and it will be interesting to see market reaction this morning at 10.00am when selling of Ecoya shares goes live.

I am betting a southerly move in shareprice based on my negative outlook for the company and a severe correction in the DOW last Friday.

The IPO price was NZ $1 with two warrants per share.

NB: First bids up this morning at 10.15am is one for 83, one for 45c and one for 25c and sellers at $1 - $1.15. No trades have yet passed.


Ecoya Ltd @ Share Investor

Ecoya IPO: A Closer Look
Ecoya Prospectus Requires free registration

Discuss ECO @ Share Investor Forum

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