Never trust the media. Remember Robert Harley at Domainfax spruiking the McGrath float:
On Tuesday December 7, after an oversubscribed $65 million IPO, McGrath will list.
…The business trajectory attracted the investors. Mr McGrath, using the graph that shows how the business had grown regardless of the market, convinced them to look past the peak of the Sydney boom.
…Privately, Mr McGrath has looked hard at Realogy, the $US6 billion ($8 billion) heavyweight of US real estate, which claims 27 per cent of US home sales with franchise brands like Century21 and Coldwell Banker, and fully owned operations like The Corcoran Group in New York. In Australia, market leader Ray White has less than 10 per cent.
“If we are going to become the consolidator in the Australian market … a publicly listed company is the best way for us to achieve our goals,” McGrath said.
The listing gives McGrath, who claims an aversion to debt, the capital to expand. The company can use scrip as well as cash to buy businesses. It will soon establish a high-performance plan to attract and hold top negotiators. And at the moment there is an arbitrage between the price of an unlisted real estate business and higher valuations on the stock market.
Well, it’s all over now, apparently, from the weekend:
Leading real estate agent John McGrath will be hoping house prices don’t drop like his shares.
In November his company, McGrath Ltd, raised $129.6 million, at $2.10 a share, for its IPO. His brokers, Bell Potter and JP Morgan, quietly estimated that the stock was four times oversubscribed.
But on Monday, when McGrath Ltd started trading the demand evaporated.
In the first two days the stock dropped to $1.70 before recovering, but only a little, to finish the first week of trading at $1.86. At that price, what was expected to be a $280 million stock was worth just $248 million.
Perhaps if you’d been more professionally circumspect in the lead up, Robert, you would not look like such a goose now.
