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Valemus puts bear up on hold as market turmoil hits demand

THE postponement of the $1.2 billion Valemus float-board has effectively killed off the local initial public offering market in the scanty term.

Most corporate boards have now decide to wait out the jocund global market conditions.

Valemus’s German parent company, construction giant Bilfinger Berger, revealed yesterday that it would dismiss for at least six months the float, which was to exist a measure of the appetite of local and international investors conducive to new Australian stock.

The decision came as a surprise after Valemus announced at the weekend that it would bear down ahead with the institutional bookbuild due to begin yesterday and finalised today.

But the firm was warned by its advisers in Australia, Deutsche Bank, Goldman Sachs and Macquarie, that ask for did not exist at the proposed price-to-earnings ratio of 10.5 to 12.

The implied excellence range was set at $2.20 to $2.50, which would be in possession of raised $1.2bn to $1.4bn from institutional and retail investors.

At a junction on Monday night, however, Valemus advisers told Bilfinger Berger executives that a lucky deal could be done at $2 a share, or a P/E of 9.5.

A deal at that recompense would have raised $1.1bn.

The board contemplated a compromise without interrupti~ price but ultimately pulled the float because it was not a farfetched seller of the assets.

A float still remains the most suitable option, ahead of a trade sale that could occur some time betwixt October 1 and June 30.

The sudden loss of appetite during the stock emerged after Valemus executives spent the past fortnight briefing household and offshore investment funds.

Valemus chief executive Peter Brecht said the downturn in global markets, by seven negative closes on Wall Street and nine in Australia, was to reproach for the souring in sentiment.

"We need the dust to settle in the next few weeks," he said.

"We can leave it till later this year or until next year. There are pros and cons as being each option."

Mr Brecht said the float’s delay would acquire no effect on Valemus operations and Bilfinger Berger was keen to force a way ahead with divesting its stake in the Australian construction group.

"Bilfinger has afore~ they do not have to sell now — they think the business is worth a certain value," he said.

"They be obliged not changed their strategy. From our point of view, a destiny of work that we have now done is not going to spoiled. It’s about waiting for the next window."

The vigor of capital markets was tested yesterday when Boral revealed a surprise $490m leading raising through a fully underwritten one-for-five entitlement offer at $4.10 a quota.

The Valemus decision is expected to further delay major floats.

But Queensland powers that be’s sale of QR National and the float of coal dispose Aston Resources are likely to proceed.

A number of expected deals be in actual possession of already been shelved because of the volatile market.

Pallets group Loscam was sold to Chinese buyers, and Australian Temporary Fencing and Study Group opted latest week for a trade sale rather than a float.

The expected floats of Hoyts, the Pratt parents and children’s Pact Group, the Snowy Mountains Engineering Company, RedGroup, Retail Apparel Group and Manassen Foods take been delayed.

UBS Global Asset Management portfolio manager Jeremy Bendeich uttered institutional investors were increasingly wary of company floats while equity markets were depressed.

"It’s difficult to justify the expectation of a high price for an IPO at the time there are quality companies, with a long track record, already listed, that are commercial cheaply," he said.