DEALTALK-Australia share sale boom taps into idle cash

* QR National, Westfield share sales end equity market
drought

* Plenty of cash looking for keenly priced equity

* Credit Suisse, RBS set to leap up bookrunner ranks

* Macquarie misses out on the action
(For more Reuters DEALTALKs, click [DEALTALK/]

By Sonali Paul and Michael Smith

MELBOURNE/SYDNEY, Nov 3 (BestGrowthStock) – Two hefty Australian
share sales, together worth more than $7.5 billion, have just
landed on top of each other, but investors have plenty of cash
on hand to meet the call.

The initial public offering of the Queensland government’s
coal haulage business QR National, due to price this month, and
a share sale by Westfield Group (WDC.AX: ), announced on
Wednesday, mark the end of a drought this year for Australian
bankers.

Share sales slumped 79 percent in the the first three
quarters, according to Thomson Reuters data, and even with the
massive sales by Queensland and Westfield, 2010’s total share
sales will be more than 60 percent below last year.

That is in stark contrast to the rest of Asia outside
Japan, where a flurry of massive initial public offerings have
nearly tripled proceeds in the first nine months of the year.

Australian investors, especially retail investors, have
been holding a lot of cash, so as long as the share issues are
not viewed as expensive, they should find solid demand,
bankers, brokers and fund managers said.

“There’s a fair amount of cash on the sidelines. In retail
land it’s been pretty lean actually since the (global financial
crisis) in terms of sentiment towards equities. It’s been quite
a long hangover,” said George Clapham, managing partner at
Arnhem Investment Management.

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Graphic on Asia’s top IPOs: http://link.reuters.com/gyp82q

Story on Westfield plans: [ID:nSGE6A10NY]

Story on QR National IPO: [ID:nSGE69K09V]

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COMPETING FOR FUNDS

Bankers and brokers were confident that even with the
competition from the Westfield sale, QR National would not need
to be repriced below the offer range of A$2.50 to A$3.00 a
share.

“I can’t see it having a material impact,” said a banker,
who declined to be identified.

“You have gone a reasonable amount of time without material
capital raisings so there is a pretty significant build up of
funds both at the retail level and also the institutional
level,” he said.

QR, which is seeking to raise up to $5 billion in
Australia’s second-biggest IPO, is due to price on Nov. 19 and
list on Nov. 22.

Fund managers have been pushing for a price at the low end
of QR National’s offer range, saying that at the top end at
19.8 times forecast earnings for 2012 it would be too
expensive.

“How many companies do you know that are priced on 20 times
FY2012? I can’t think of many on the ASX at that kind of
multiple,” said Jason Teh, a portfolio manager at Investors
Mutual.

At the bottom end, the QR National offer would be priced at
16.5 times forecast earnings for 2012.

“There is appetite for good deals. It just comes down to
price,” Teh said.

Bankers and fund managers said the Westfield and QR
National offers are targeting different types of investors,
with Westfield oriented to yield investors, while QR National
is being sold as a growth story.

“Westfield is not going to have any trouble attacting
people either. They just want to get it at the best price,”
said Chris Kimber, a client adviser at broker Bell Potter.

BANKERS’ FEAST

The Westfield deal is a coup for investment banks, with the
group paying out about A$110 million in fees.

The deal is likely to propel banks with roles in both the
QR National float and Westfield to the top of the equity
capital markets league tables for this year, which should
favour Credit Suisse (CSGN.VX: ) and Royal Bank of Scotland
(RBS.L: ).

RBS and Credit Suisse rank fourth and seventh in the
Australian league table for the year to date in 2010, while UBS
(UBSN.VX: ) tops the ranks with $3.7 billion in deals, according
to Thomson Reuters data.

Those figures do not reflect the Westfield and QR National
raisings which will not be included until the offer date.

UBS and Bank of America Merrill Lynch could retain their
No.1 No.2 positions by the end of the year, as they are both
working on the QR National float.

Morgan Stanley (MS.N: ) (Read more about the money market today. ), Credit Suisse and Citigroup (C.N: )
are lead advisors on the Westfield restructuring and are
underwriting A$1.75 billion ($1.75 billion) between them.

Absent from this year’s league table of top 25 bookrunners
and missing from the mega-deals is Australia’s top investment
bank, Macquarie Group (MQG.AX: ).
($1=1.002 Australian Dollar)
(Editing by Lincoln Feast)

DEALTALK-Australia share sale boom taps into idle cash