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Nine Entertainment shares decline up to 3.4% on stock market debut

December 5
11:59 PM 2013

The shares of Nine Entertainment Co declined up to 3.4% in its trading debut in Australia. As of 2:24 PM in Sydney, Bloomberg reported that shares of the Australia-based broadcaster fell to AUD 2 compared to their AUD 2.05 per share offer price. The IPO occurred nearly 14 months after private equity firms Apollo Global Management and Oaktree Capital Group acquired Nine Entertainment through a debt-for-equity swap.

In a phone interview with Bloomberg, Invast Financial Services Chief Market Analyst Peter Esho said investors might want to gauge the market first. He said, "It's probably not wise to write a check immediately. Wait a few weeks and see what happens then."

Nine and its current investors were able to gather AUD 636 million or USD 576 million in its IPO after pricing the shares at the low end of its indicative range. It was the second largest IPO this year. The company said the funds raised for the share sale will be used to pay off debt as well as to return money to its private equity owners. 

Data gathered by Bloomberg showed that the IPO valued nine at around 8.3 times its estimated earnings before interest, tax, depreciation and amortization or EBITDA for the year that will end in June 2014. It also included its debt. This compared with that of bigger broadcaster Seven West Media Ltd which had an EBITDA of 7.5 Times.

Bloomberg data also revealed that the IPOs in Australia for last month alone was AUD 3.2 billion, which was more than the combined value of the previous 22 months. The success of Nine's IPO for its private equity owners was in contrast to the losses incurred by CVC Capital Partners Ltd when it purchased the broadcaster from Australian billionaire James Packer seven years ago. Packer's grandfather, Frank Packer, owned Nine Entertainment.

The largest Australian IPO this year was Pact Group Holdings Ltd, which conducted a AUD 649 million share sale last month. Controlled by Raphael Geminder, Pact Group Holdings Ltd is a packaging manufacturer.

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