CORPORATE FINANCE Survey of the Australian Capital Markets ... · experienced as a result of International Financial Reporting ... amounts raised across most capital raising types

ADVISORY

Survey of the Australian Capital Markets 2005-06

CORPORATE FINANCE

About the survey

This document, Survey of the Australian Capital Markets 2005-06,has been prepared by KPMG's Corporate Finance practice.

Our annual survey was first published in 1999. It tracks activity inAustralian equity and debt markets, including initial public offerings,placements, rights issues, hybrid securities, private equity and debt issues.

This year’s survey also comments on other issues that impact the market, such as regulatory changes, the continued changesexperienced as a result of International Financial ReportingStandards, the Basel II Capital Accord and taxation developments.

Equity markets 3

Hybrid securities 11

Debt markets 13

Industry highlights 17

IPOs in detail 22

Thinking of an IPO? 30

Share buybacks, dividends paid and takeovers 31

Regulatory climate 34

Outlook for 2006-07 37

Appendix I: Full listing of IPOs for the 2005-06 financial year 42

Contact us 48

Related KPMG publications 48

Contents

© 2006 KPMG, an Australian partnership, is part of the KPMG International network. KPMG International is a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG.

Note: Unless otherwise stated, the amounts in this document are Australian dollars.

2 Sur vey of the Austra l ian Capi t a l Markets 2005-06

Australia stood out in an exceptionally buoyantyear for equity markets. Australian capital raisingsamounted to $42.5 billion, of which more than aquarter were attributable to initial public offerings.


Sur vey of the Austra l ian Capi t a l Markets 2005-06 3

Australian equities marketSplit of equity raised

Equity raisings in the 2005-06 financial year were characterised by an increase inamounts raised across most capital raising types. Initial public offerings (IPOs),placements, dividend reinvestment plans (DRPs) and calls experienced an increase in theamounts raised, while rights and options declined. IPOs remained constant as aproportion, at 28 percent of total raisings.

Together, IPOs ($11.9 billion) and placements ($11.6 billion) accounted for more thanhalf of the year’s equity raisings.

Total equity raised 1999-2006 ($ billion)Year 1999 2000 2001 2002 2003 2004 2005 2006IPOs 4.90 15.43 3.86 1.99 3.22 9.97 9.79 11.89Placements 5.37 8.66 7.48 13.74 7.33 7.74 8.75 11.61Dividend reinvestment plans 3.63 3.85 3.91 4.63 4.29 5.17 7.19 7.33Rights issues 2.92 2.13 1.95 2.58 6.86 10.10 5.70 5.66Calls 7.86 0.33 7.57 0.03 0.79 0.24 0.70 2.06Exercises of options 0.74 0.75 0.46 0.08 0.48 0.96 0.74 0.45Other 1.35 1.34 2.69 2.87 2.02 3.15 1.98 3.50Total 26.77 32.49 27.92 25.92 24.99 37.33 34.85 42.50

Note: Other includes employee share plans and share purchase plans.

New capital raisings during 2005-06 increased by 22 percent over the previous year to$42.5 billion, which represents the highest level of capital raisings since the surveybegan in 1999.

For the second consecutive year, IPOs were the largest source of new equity, raising $11.9 billion in 2005-06. This was the highest level of IPO raisings since 1999-2000 whenTelstra T2 boosted IPO raisings by a massive $9.8 billion to $15.4 billion. ExcludingTelstra T1 and T2, 2005-06 represents the highest level of IPO raisings in a decade. Much of the IPO activity took place in the second quarter when the market absorbedbillion dollar plus floats by Goodman Fielder, SP AusNet and Spark Infrastructure Group.IPO activity was subdued in the third quarter with just $141 million being raised beforepicking up momentum in the final quarter, which saw $2.4 billion raised.

Placements continued to be popular in the latest year. Both the amount raised and thenumber of placements increased over 2004-05. This confirmed the trend for placements to occupy one of the top two places in terms of aggregate dollars raised. Placements offer several advantages compared with alternative forms of capital raising, includingadministrative efficiency and speed to market. Companies in the materials sector, especiallymetals and mining, took full advantage of the positive market sentiment, accounting for justunder half of the year’s placements by number and 27 percent of capital raised throughplacements with an average placement size of just $5.2 million.

Equity markets

Dividend reinvestment plans17%

Placements27%

Rights13%

IPOs28%

Calls5%

Options2%

Other8%



DRPs remained a major source of new equity for listed companies. Growth in DRPsappears to have levelled off, with the total capital raised from this source increasing byjust 2 percent compared with the previous year. This could be explained by animprovement in the ‘balance sheet strength’ of companies.

Rights issues raised $5.7 billion, which was comparable to the 2004-05 figure but thenumber of rights issues increased significantly. Although the resources sector waslargely responsible for the higher volume of rights issues, real estate investment trustsled the way for aggregate dollars raised.

Of the companies that floated during 2004-05 eight deferred instalments amounting toover $2 billion in total. These deferred instalments helped more than double the amountof capital raised through calls to $2.1 billion. Here the top raisings were by ConnectEast($520 million), last year’s largest IPO, Babcock & Brown Capital ($500 million) andMacquarie Capital Alliance Group ($500 million).

Quarterly breakdownBreakdown by quarter (financial year)

Action Qtr 1 ($m) Qtr 2 ($m) Qtr 3 ($m) Qtr 4 ($m) Total valueCalls 60 726 626 650 2,062DRP 2,206 1,780 1,747 1,600 7,333IPO 1,546 7,830 141 2,370 11,887Options 157 162 56 78 453Placement 1,928 2,392 2,640 4,650 11,610Rights 1,250 1,957 755 1,699 5,661Other 874 1,074 864 685 3,497Total 8,021 15,921 6,829 11,732 42,503

Swings in market sentiment added to volatility over the year. Positive investor sentimentand a robust market characterised the first quarter. Companies took advantage of thesefactors by raising over $8 billion, an increase of 32 percent over the same period last year.

Sentiment became negative in October in response to higher energy prices and concernsthat the domestic economy might be slowing. However, a rush of floats by utilities trustsboosted aggregate capital raisings to $15.9 billion in the second quarter.

The third quarter saw many companies delivering or signalling further record profits.This helped the S&P ASX 200 breach the symbolic 5000 level. However, capital marketactivity slowed as the IPO and rights markets took a breather.

An increase in interest rates combined with the knock-on effect of softness in overseasmarkets saw the indices retreat in quarter four. The S&P ASX 200 fell back below the5000 level in May, erasing the gains achieved in the prior two months. The marketsremained cautious but volatile throughout the quarter due to concerns regarding USinflation and falling commodity prices.



Top five equity raisings by typeCompany name Raising type Equity raised ($m) Industry2005-06Goodman Fielder IPO 2,649 Food, Beverage & TobaccoSP AusNet IPO 1,415 UtilitiesSpark Infrastructure Group IPO 1,145 UtilitiesDyno Nobel IPO 1,075 MaterialsWestpac TPS Trust Rights issue/hybrid 763 Banks

7,0472004-05National Australia Bank DRP 1,210 BanksMacquarie Communications and Infrastructure Group Rights issue 800 MediaMacquarie Infrastructure Group DRP 790 TransportationMacquarie Countrywide trust Rights issue 706 Real EstateConnectEast IPO 616 Transportation

4,1222003-04ANZ Rights issue 3,599 BanksPacific Brands IPO 1,258 Consumer Durables & ApparelAMP Rights issue/hybrid 1,184 InsuranceZinifex IPO 925 MaterialsMultiplex IPO 901 Capital Goods

7,867

A feature of the year was the four, one-billion dollar plus equity raisings. In 2004-05 only one raising, the $1.2 billion DRP by National Australia Bank, topped the billiondollar mark.

IPOs have not been this dominant since 1997-98. In that year IPOs by Telstra T1,Telecom NZ, NSW TAB and AMP took the top four equity raising slots. In 2005-06,companies took advantage of favourable investor sentiment, the weight of money in themarket and the ongoing demand for quality investments to complete some major IPOs.No doubt they were also mindful of Telstra T3, which is being considered for the marketin 2006-07.

Goodman Fielder was the year’s largest float, attracting plenty of media attention.Goodman Fielder ran a dual-track process to maximise value, reportedly turning downan offer of over $3.5 billion (enterprise value) from a syndicate of private equity firmsincluding Pacific Equity Partners in favour of a public float. Goodman Fielder is nowAustralia’s largest publicly listed food group.

The second and third spots were occupied by the two utilities giants, SP AusNet andSpark Infrastructure Group. SP AusNet was listed simultaneously in Australia andSingapore, with the parent company, Singapore Power, retaining 51 percent ownershipinterest. The assets offered by the two companies were very similar. SP AusNet ownselectricity transmission and electricity and gas distribution assets in Victoria. The assetsof Spark Infrastructure Group comprise a 49 percent interest in each of CitiPower,Powercor and ETSA – all three being electricity distribution companies based in eitherVictoria or South Australia. Despite their similarities, the two decided to list within threedays of each other, raising fears of investor indigestion. In any event, investors remainedhungry for high yields and the capital stability offered by infrastructure assets.

DRPs failed to make the top five after filling the number one and three spots in theprevious year. On the back of double-digit earnings’ growth, companies were keen toreturn cash to shareholders through higher dividends and share buybacks.



Rights issuesTop five rights issues

Company Amount raised ($m)Westpac TPS Trust 763Orica Limited 516Babcock & Brown Infrastructure Group 386Galileo Shopping America Trust 330APN/UKA European Retail Trust 282

2,277

Rights issues generated $5.7 billion accompanied by an increase in volume. A notabletrend was the number of companies combining rights issues and placements to fundmajor acquisitions.

• The top spot belonged to the Westpac Trust Preferred Securities (TPS) hybrid issueby Westpac Banking Corporation. The Westpac TPS offered a floating rate returnfrom a combination of cash distributions and franking credits. The issue provedpopular with investors looking for an alternative to fixed income securities. The cashraised was used to fund Westpac’s New Zealand business.

• Orica raised $516 million in a pro rata renounceable one-for-eight rights issue. The final price was $20.30 per share, which was significantly higher than the initiallyplanned $15.00 per share. It represented a slim 1.6 percent discount to market price,highlighting the demand for this issue. The funds from the rights issue and asubsequent placement were used to partially fund the acquisition of the European,Middle Eastern, African, Asian and Latin American businesses of Dyno Nobel.

• Babcock & Brown Infrastructure Group (B&B) took the same route in funding itsacquisition of PD Ports, the UK’s second largest port operator. B&B’s combined issue raised $705 million in all, of which $385.8 million came from the 1-for-4.65 non-renounceable rights issue.

• Galileo Shopping America Trust raised $330 million via a non-renounceable five-for-eight rights offer. The funds raised were used to partly fund its US$968million acquisition of 69 shopping centres from New Plan Excel Realty Trust.

Placements*Top five placements

Company Amount raised ($m)Macquarie Bank Limited 700Macquarie Infrastructure Group 675A.B.C. Learning Centres Limited 600Orica Limited 500Macquarie Goodman Group 322

2,797

Placements raised $11.6 billion representing a rise in both the amount raised and issuevolume compared with 2004-05.

• The top spot belonged to Macquarie Bank which raised $700 million through aninstitutional private placement. The placement was part of Macquarie Bank’s capitalinitiative program to fund international expansion opportunities. The placementissued 10.6 million shares at $66 per share.


* Placements include public offers for new listings from previously listed entities excepting rights issues.


• Macquarie Infrastructure Group took the second spot, placing around $675 million inordinary stapled securities at $3.87 per security, a discount of just 0.5 percent to marketprice, highlighting the incredible market strength of this product. The placement wasused to fund Macquarie’s investment in the Dulles Greenway, a tollway in Virginia.

• A.B.C. Learning Centres conducted three placements during the year that raised atotal of $920 million. The largest placement raised $600 million at $7.30 per share in May 2006. The raising was used to fund A.B.C. Learning Centres’ aggressiveacquisition strategy.

• Following a rights issue of $516 million, Orica placed step-up preference securities tohelp fund its acquisition of the Dyno Nobel businesses. The placement raised $500million and was $100 million oversubscribed.

Dividend reinvestment plansTop five dividend reinvestment plans

Company Amount raised ($m)Woolworths Limited 613Commonwealth Bank of Australia 480Westpac Banking Corporation 427Macquarie Goodman Group 337Macquarie Infrastructure Group 312

2,169

The popularity of DRPs appeared to have levelled off after several years of stronggrowth. As already noted, Australian companies have been generating plenty of cash. In many cases, cash resources exceeded the amounts needed to fund growth andexpansion opportunities. As a result, much of the excess cash has been returned toshareholders. This, coupled with the mature profile of a number of these companies,results in less desire to raise more equity. Thus for the 2005-06 financial year,companies returned $37.5 billion to shareholders through cash dividends and sharebuybacks (net of DRPs) compared with $34.6 billion for the prior year.

The top five DRPs in 2005-06 raised $2.2 billion, $536 million less than the top fiveDRPs in 2004-05. Last year’s figure was boosted by the $1.2 billion DRP issue by NABwhich was the biggest individual equity raising in 2004-05. DRPs tend to be favoured bylarger organisations. Thus companies in the real estate and banking sectors were the bigusers of DRPs in the latest year, raising $2.1 billion and $1.6 billion respectively.

Net funds flowDescription Inflows/(Outflows) ($m)New equity raisings 42.5Share buybacks (6.1)Dividends declared/paid (38.7)Public takeovers (cash component) (9.2)Net inflow/(outflow) (11.5)

The Australian capital markets raised $42.5 billion during the 2005-06 financial yearand simultaneously returned $54.0 billion through share buybacks, dividends and thecash component of public takeovers.1

Consistent with prior years, the amount of cash returned to investors exceeded theamount raised by companies. This, combined with the weight of money in the marketfrom superannuation funds, suggests that there is plenty of cash looking for suitableinvestment opportunities.

1 The cash component of public takeovers is based on all deals completed within the 2005-06 financial year and where the target is an Australianpublic company.



World equity marketsIt was a generally strong year on major bourses despite ongoing concerns about interestrates and oil prices.

AustraliaS&P ASX 200 (up 19% from 4278 to 5074)Australian equities enjoyed another exceptional year with the main S&P ASX 200 indexbreaking through the 5000 mark in late March 2006, gaining 19 percent for the full year.This was the third successive year of double-digit gains on the Australian StockExchange (ASX). Share prices were supported by the booming demand for naturalresources and the sheer ‘weight of money’ in the market. Australia is the world’s 17th largest economy,2 but its managed funds industry is the world’s fourth largest.3

Approximately $15 billion is contributed to superannuation funds each quarter, with a significant portion flowing to the equity market.

However, one interesting point to note is that the overall market performance was notevenly spread across all stocks. At 31 December 2005, the 20 biggest companies in theASX index accounted for over 80 percent of the whole market’s performance.4 Thesecompanies include BHP Billiton, Rio Tinto and the four major banks. Excluding these20 stocks, the market increased by just 2.9 percent.

Several corrections were experienced during the year. The market turned down inOctober, reflecting concerns about high oil prices and possible interest rate increases inthe US. February saw a further correction when the Reserve Bank of Australia indicatedthe next movement in interest rates was more likely to be up than down. This wasconfirmed in early May when the Reserve Bank raised rates by 25 basis points.


2 World Economic Outlook Database, International Monetary Fund, April 20063 Funds hit magic trillion mark, Financial Review, 20 June 20064 Tough getting lucky in a year when heavyweights dominated the market. The Age, 28 January 2006

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The central bank’s move coincided with a sharp decline on overseas’ stock exchanges,and this reverberated through the local market with a downturn in commodity pricescausing the markets to fall during May.

United StatesS&P 500 (up 7% from 1191 to 1270)After a lacklustre 2005, US equities showed little strength in the latest year andcontinued to underperform other key markets. Seventeen successive small interest raterises put a dampener on market sentiment, as did high oil prices.

From late 2005, the S&P 500 trended firmer, reflecting strong profit growth and signsof economic recovery, including moderate employment and consumption growth.However, similar to other major stock exchanges, US equities experienced a sharpdownturn in May. As experienced during previous cycles, an expected halt in interestrate rises should see an upturn in world markets.

United KingdomFTSE 100 (up 14% from 5113 to 5833)Equity investors in the UK were bullish for the second successive year, with the‘Footsie’ gaining 14 percent over the year, breaching the psychologically important 6000 level in March.

Market sentiment may have been helped when the Bank of England cut interest rates by 25 basis points in August, which was followed by some recovery in Gross DomesticProduct (GDP) and consumption figures. Other factors included higher-than-expectedcompany earnings and strong takeover activity. However, as with all other majormarkets, the market retreated in May, falling below 6000 on fears of decliningcommodity prices and higher US interest rates.

JapanNikkei 225 (up 34% from 11584 to 15505)Among the major world equity markets, Japan was the outstanding performer. TheNikkei 225 gained a spectacular 34 percent over the year boosted by optimism aboutdomestic growth and signs that Japan’s seven-year deflation was coming to an end. TheNikkei took off in September after Prime Minister Koizumi’s Liberal Democratic Partygovernment was re-elected. Koizumi’s victory was widely regarded as a popularendorsement of his economic reform plans.

The Nikkei suffered a sharp reverse in January when investors rushed to sell technologystocks in the wake of the Live Door stock price manipulation scandal while in thefollowing month fears surfaced that foreign investors were retreating from Japaneseequities. This was confirmed further in May 2006 when the Nikkei was hit hard by theglobal volatility in equity markets.



ChinaNo discussion of world equity markets can ignore the China factor.

China’s GDP grew by 9.9 percent in calendar 2005, exactly in line with the averageannual growth rate since 1992.5 According to the International Monetary Fund, Chinaaccounted for almost a third of the world’s growth in the past few years.

China’s industrialisation and urbanisation has been the key driver of the recent strongincrease in the demand for natural resources. In 2005 China accounted for over 40percent of world consumption of metallurgical coal, thermal coal and iron ore, and over20 percent of the world consumption of crude steel, aluminium, copper and zinc.6

On 27 April 2006 the People’s Bank of China raised interest rates by 27 basis points.The measure was interpreted as a move to cool an overheated economy. Commodityprices responded by softening, leading to a partial sell-off of resources stocks and ageneral weakening of equity markets across the Asia Pacific region.

IndiaIndia experienced economic growth of 8.0 percent over calendar year 2005. TheInternational Monetary Fund is forecasting GDP growth of 7.3 percent for 2006.7

China and India are often mentioned together as emerging market powers, but there aresome significant differences between the two economies. The story on China has beendominated by the growth of its manufacturing industry. In contrast, India has placedmore emphasis on the services sector, with growth for finance, IT and insurance sectorsoutpacing the manufacturing sector. There is also a significant difference in scale –China’s economy is about three times larger than India’s. The different approaches of therespective governments have also influenced the relative speed and nature of growth forthe two countries.

In the 2005-06 financial year, Indian companies announced their presence on the worldstage with a spate of overseas acquisitions, including:

• Mittal Steel’s acquisition of Europe’s biggest steel maker, Arcelor, for €26.9 billion

• Dr Reddy’s Laboratories’ acquisition of German pharmaceutical company Betapharmfor €480 million

• Suzlon Energy’s acquisition of Belgian company EVE Holding NV for over €430 million

• Tata Coffee’s acquisition of US company Eight O’Clock Coffee Company forUS$220 million.


5 Statement on Monetary Policy Reserve Bank of Australia, 13 February 2006.6 Australian Commodities Australian Bureau of Agriculture and Resource Economics, March 2006.7 World Economic Outlook, International Monetary Fund, April 2006


Hybrid securities8 remained popular in 2005-06, making up $13.2 billion of the $42.5 billion raised during the year.

Factors driving the demand for hybrids include the tax benefits to issuers, the continuedstrong demand from investors keen for yield and recent changes in the rating andregulatory environment.

For issuers, hybrids offer the ability to defer dividend or interest payments for anythingup to 10 years (since distributions can be at issuer’s discretion), although deferralgenerally causes dividend ‘lock-up’. Hybrids can often be classified as equity on thebalance sheet, but can be issued at less cost than equity. However, the introduction of theAustralian equivalent of the International Financial Reporting Standards (AIFRS) hasresulted in certain hybrids being reclassified from equity to debt. As a consequence,several companies have already replaced existing hybrids with new instruments. Thistrend is expected to continue as existing hybrids come due for redemption.

The outcome of the Toll-Patrick takeover was an interesting development, as both hadhybrids listed on the ASX. An immediate benefit to holders of Patrick’s ConvertibleReset Adjusting Notes (CRANES) was that the price of Patrick shares surpassed the calloption price embedded in the CRANES. The acquisition triggered a ‘Change in ControlEvent’ which allowed the Patrick board to convert all CRANES to Patrick shares. In accordance with the CRANES terms, each CRANE converted into 12.9675 Patrickshares, valued at about $114.93 on the conversion date. This is slightly lower thanCRANES’ closing price of $116.50, but is a significant improvement to the issue priceof $100 per CRANE. However, investors now face the dilemma of holding a securitythat is much more volatile than the income focused CRANE.

The Australian market has retained a leadership role with respect to hybrid development.As traditional ‘developed’ capital markets such as the UK and Europe start to realise thebenefit of these instruments, the Australian market continues to develop innovative newproducts for companies across a number of industries. At the same time the US marketfor hybrids continues to grow despite various regulatory rulings restricting theparticipation of insurers in certain new issues (primarily around the treatment of thesecurities as equity for risk-based capital requirements).

Significant hybrid issuesCompany Hybrid Raising type Amount raised ($m)Westpac TPS Trust Westpac Trust Preferred Securities Rights issue 763Orica Step-up Preference Securities Placement 500John Fairfax Holdings Stapled Preference Securities Placement 300DCA Group Hybrid Equity-Linked Trust-issued High-Yield Securities Rights issue 200Futuris Corporation Futuris Hybrids Placement 150

1,913

Hybrid securities

8 Hybrid securities include stapled securities and exclude hybrids that are classified as debt for accounting purposes.



The hybrid securities market has been traditionally dominated by companies in thebanking and diversified financials sectors. While this trend is still visible in 2005-06, thereare an increasing number of companies outside these traditional sectors issuing hybrids.

• The Westpac Trust Preferred Securities (TPS) raised $763 million which was used tofund its New Zealand’s business. The margin was just 1 percent to the 90 day bankbill rate, with a step-up of 1 percent approximately 10 years after issue. Demand forthe Westpac TPS was strong as the issue closed $63 million oversubscribed.

• Orica’s step-up preference securities used in the acquisition of Dyno Nobel’s assetshighlighted the development and flexibility of hybrid securities. Orica was able toutilise a five-year hybrid to fund the acquisition which was rated positively byStandard & Poor’s, thereby improving Orica’s credit rating and cost of capital.

• Media company John Fairfax Holdings raised $300 million through a placement ofstapled preference securities (Fairfax SPSs). The funds raised were used to partiallyfund the acquisition of Trade Me, New Zealand’s biggest online auction site. Theinitial distribution rate was set at 1.55 percent to bank bill swap rate. The expectedS&P credit rating of the Fairfax SPSs is BB+.

• Healthcare company DCA Group issued Hybrid Equity-Linked Trust-issued High-Yield Securities (HELTHYS) to refinance the acquisition of Guardian HealthcareGroup. The issue raised $200 million, which was approximately $50 millionoversubscribed. HELTHYS offered non-cumulative, fully franked dividends with amargin of 2.25 percent to the 90 day bank bill swap rate.



The Australian debt market has been exceptionally borrower friendly over the past sixyears, reflecting intense competition between lenders and what has been perceived as abenign credit environment. This trend continued throughout 2005-06 with the competitiveclimate exerting downward pressure on margins and leading to a progressive easing oflending criteria. More relaxed permissible debt service ratios have also resulted.

Bank debt marketBank loan volume in Australiasia was driven to a new high of around $77 billion in 2005,largely as a consequence of increased corporate refinancings together with mergers andacquisitions (M&A) and leveraged buy-out activity. Acquisition-related loans were 49percent higher than in 2004.

The increased financing of leveraged buy-outs resulted from banks working with privateequity houses to aggressively gear bids and pay high acquisition multiples, suchleveraged deals are continuing at record levels.

According to S&P’s Leveraged Commentary Data, companies with ratings belowinvestment grade raising finance in March 2006 had debt of 5.73 times earnings beforeinterest, taxes, depreciation and amortisation (EBITDA). This is the highest figure sincethe leveraged loan market started to be tracked in the late 1990s.

The last year witnessed record deal sizes in the Australian leveraged finance market withKohlberg Kravis Roberts & Co (KKR) setting a new high water mark in June 2006 with its$1.8 billion purchase of Bramble Industries’ Cleanaway and Industrial Services businesses.A stapled debt financing was offered to prospective bidders by UBS, the vendor’s advisers,to help support the sale and facilitate a smoother transaction process. The final senior debtpackage of approximately $1.4 billion which financed the winning bid was jointlyunderwritten by lead arrangers UBS, Credit Suisse and Citigroup. In addition, Credit Suissesolely funded the $250 million subordinated portion of the transaction. The deal representedtotal leverage of approximately six times combined EBITDA.

Other major leveraged finance deals during the year included the Newbridge Capital-ledconsortium’s $1.4 billion bid for 61 Myer department stores, together with the company’sflagship Melbourne CBD site, backed by $995 million and $225 million of senior andsubordinated debt respectively. In January, CCMP Asia Capital acquired WacoInternational for $1.2 billion in a deal which reportedly included over $500 million ofsenior debt and a $140 million subordinated debt facility.

Despite this significant increase in leveraged finance deals, debt refinancing remained themain driver of corporate borrowing, accounting for 42 percent of all corporate debt raisingin 2005-06. Many borrowers appear to have achieved substantial margin improvements asthe following graph shows.

Debt markets



Reduced margins on refinancing deals

Reflecting favourable economic conditions and strong corporate balance sheets, bank loan loss provisions have dropped to all time lows. As at December 2005 only 0.4 percent of banks’ on-balance-sheet assets were classified as non-performing, only half of which were classified as impaired.

Australian banks’ impaired assets

Significant debt hybridsIn the debt hybrids arena, the Woolworths Notes issue was of significance. TheWoolworths Notes offered institutional investors access to ‘gross pay’ rather thanfranked dividends. The Notes were structured primarily with the Australian market inmind and were released with an initial margin of 1.1 percent to the three-month bankbill rate. This was a great result for Woolworths given the subordinated nature of thedebt, the coupon deferral option of 10 years and the size of the transaction. Also ofimportance with respect to the Woolworths Notes was the desire to classify theinstruments as debt. This allowed the company the ability to hedge interest rate volatilityeffectively through derivatives under AIFRS.

Another significant debt hybrid transaction was the Perpetual ExchangeableRepurchaseable Listed Shares (PERLS III) issue by Commonwealth Bank of Australia(CBA). The issue raised almost $1.2 billion, substantially exceeding the $900 milliontarget set by CBA. The proceeds were used to redeem CBA’s existing hybrid instrumentPERLS. CBA was able to lower its cost of capital by achieving a margin of 1.05 percentto the bank bill swap rate.


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WSO Finance

MacArthur Coal

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Loy Yang Power Management

Gladstone Power Station

Symbion Health Group

PaperlinX

Downer Group

United Energy Distribution

Sun Metals

Tabcorp

Australia Pacific Airports

2005 Refinance Previous marginMargin (%)

0.0 0.4 0.8 1.2 1.60.2 0.6 1.0 1.4 1.8


Credit quality improvementsAccording to the latest Standard & Poor’s Annual Global Corporate Default Study, the ratio of credit downgrades to upgrades fell to 0.74 in 2005, bringing the ratio in line with 1997 levels.

S&P ratings downgrade/upgrade ratio

There has also been a drop in default rates.

Global credit default summary

The improved credit quality of issuers, supported by strong economic conditions, has resulted in banks becoming more bullish in their credit assessments.

Investment grade Speculative grade

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US private placement debt marketAustralian borrowers also found the US private placement market an attractivealternative, with issues totalling US$5.4 billion in calendar year 2005. This market hasproved attractive to Australian issuers because of its ability to offer borrowers longertenors and potentially cheaper pricing.

US private placement volumes

Domestic bond marketNo longer a backwater, domestic bond issuance amounted to a record $56 billion in2005-06. Twelve of these bond issues exceeded $1 billion each.

Factors in this activity included credit spreads at near 10-year lows and increasinginvestment into fixed-interest assets by superannuation funds.

Capital return as a defence strategyTwo recent hostile takeover attempts have been defended by capital managementinitiatives. The targets in question were the London Stock Exchange (LSE) and, closer to home, Baycorp Advantage (BCA).

Both defences involved 100 percent debt-funded returns of capital to shareholders.Some of the key features of each defence were:

• LSE: £510 million returned to shareholders, earnings per share accretion of 6.6 percent and gearing increased from 0.03 to 4.4 times.

• BCA: $114 million returned to shareholders and gearing increased from 0.1 to 2.0 times.


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Over the past three years real estate, materials, banks and diversified financials havebeen the major industries in terms of equity raisings.

However, this year produced some surprises. Capital raisings by utilities companiesmore than doubled, mainly as a consequence of the popularity of utilities trusts. Thefood, beverage and tobacco sector saw strong growth, primarily as a result of the $2.6billion Goodman Fielder float (Excluding Goodman Fielder, this sector’s capital raisingsincreased from $352 million to $506 million).

2004 2005 2006Amount Amount Amount

raised raised raisedIndustry ($m) Rank ($m) Rank ($m) RankReal Estate 5,495 2 7,612 1 7,619 1Materials 5,063 3 2,578 5 6,836 2Diversified Financials 3,259 4 4,876 2 4,187 3Utilities 1,072 12 1,211 9 3,852 4Transportation 2,145 6 4,113 3 3,196 5Food Beverage & Tobacco 523 18 352 15 3,155 6Banks 6,012 1 3,106 4 2,280 7Energy 772 16 2,538 6 2,206 8Consumer Services 0 - 0 - 1,459 9Health Care Equipment & Services 638 17 1,240 8 1,234 10Media 1,397 8 2,120 7 1,138 11Unclassified 849 14 18 22 940 12Capital Goods 1,709 7 1,138 10 926 13Food & Staples Retailing 403 20 740 12 803 14Commercial Services & Supplies 447 19 532 13 630 15Insurance 2,384 5 327 16 483 16Pharmaceuticals, Biotechnology & Life Sciences 1,005 13 520 14 473 17Retailing 1,161 10 228 19 395 18Software & Services 152 23 233 18 278 19Telecommunication Services 188 21 316 17 182 20Technology Hardware & Equipment 163 22 216 20 145 21Consumer Durables & Apparel 1,294 9 798 11 43 22Semiconductors & Semiconductor Equipment 0 - 13 23 25 23Automobile & Components 91 24 27 21 18 24Hotels Restaurants & Leisure 1,111 11 0 24 0 25Total 37,333 34,852 42,503

Real estateThe real estate industry took the top spot for capital raised for the second consecutiveyear with $7.6 billion. Despite strong performance by Australian equities (especiallythose in the resource sector), it is the real estate sector that dominated 2005-06,accounting for 18 percent of total capital raised. It appears that investor demand forincome producing securities and the perceived relative safety of real estate assets remainshigh. There has been increased focus on offshore portfolios, a trend expected to continuein 2006-07.

Consistent with prior years, the industry utilised all types of capital raising, led by DRPs($2.1 billion), placements ($1.9 billion) and rights issues ($1.9 billion). Although therewere only 13 real estate IPOs, they raised an average $81 million per offering. Thelargest individual real estate capital raising transaction was Galileo Shopping AmericaTrust’s $330 million rights issue.

Industry highlights



Materials and energyThe performance of companies in the energy and materials sectors (including metals and mining) underpinned the overall performance of equities in the latest year. Notsurprisingly, many companies have taken advantage of favourable conditions to raisecapital to fund growth opportunities and exploration. Indeed, the sector accounted for 32 percent of all capital raisings in 2005-06 by number, although the average value ofindividual raisings was an extremely modest $3.1 million. This phenomenon can beexplained by the small, speculative nature of many of the companies raising capital.

Placements were again the favoured method of capital raising for the materials sector,accounting for 45 percent of the funds raised.

A significant portion of the capital raised will likely be invested in infrastructure, such asrail and ports, to expand production capacity. Companies servicing the industry includingDowner EDI, WorleyParsons and the soon to be listed Emeco are also likely to benefitfrom these investments.

Many observers believe the current resources boom will continue for some time.Demand remains strong with China and the US reporting annual GDP growth rates of10.2 percent and 3.5 percent respectively for the latest March quarter.9 On the supplyside, production has been constrained by labour scarcities and the long lead timesrequired to ramp up output.

Diversified financialsCapital raisings by diversified financial companies fell by 14 percent to $4.2 billion in 2005-06.

It should be noted, however, that the previous year’s figure was augmented by cashboxraisings from Macquarie Capital Alliance, Babcock & Brown Capital and Allco EquityPartners. This activity produced ripple effects in 2005-06, with Macquarie CapitalAlliance raising $500 million, Babcock & Brown Capital $500 million and Allco Equity$183 million from calls actually issued in the previous year. Without these transactions,the year lacked substantial raisings, with the largest IPO being Allco Max Securities andMortgage Trust’s $160 million issue. Cashboxes appear to have gone out of favour,probably because these entities have often struggled to find well-priced investmentopportunities and their share prices have fallen accordingly.

UtilitiesUtility companies undertook several very large capital raisings in 2005-06, particularlyduring the second quarter. This quarter saw listings by SP AusNet (raising $1.4 billion),Spark Infrastructure Group ($1.1 billion), Alinta Infrastructure Holdings ($464 million)and Babcock & Brown Wind Partners ($396 million). Collectively, these raisingsaccounted for 89 percent of all the money raised in the utilities sector for the full year.

The utilities trusts offered forecast distribution yields from 6.75 to 9.25 percent perannum, making them attractive to yield driven retail investors. Nevertheless, utilitiestrusts have been criticised for high debt levels and complex fee structures. The long-term sustainability of their distribution yields has also been questioned.


9 Statement on Monetary Policy, Reserve Bank of Australia, 5 May 2006


Consumer marketsIn the past year we saw a decline in the number of capital raisings across the broaderconsumer markets sector. Notwithstanding this trend, the main sub-categories generallydemonstrated a similar level of raising as in the previous year, implying a greater scale offunds per issue. Notable segments were the food manufacturing and food retail segments.

Within the food manufacturing segment the largest capital raising was the high profile‘re-listing’ of Goodman Fielder in December 2005, raising $2.6 billion. GoodmanFielder is now the largest listed food producer in the Australian market. Its process ofcoming back to the market, and in particular the dual track process (trade sale vs. IPO)employed by Burns Philp, was a stand-out event for the Australian equity market lastyear. Other food and beverage capital raisings included Foster’s Group’s $53.4 millioncapital raising via its dividend reinvestment plan in October 2005.

There were several other significant consumer related transactions in the past year, the most significant of which included Coles Myer’s sale of the Myer department storesto Newbridge Capital and the Myer family for $1.4 billion in March 2006 and BurnsPhilp’s sale of Uncle Toby’s to Nestle for $900 million in May 2006.

The sector remains relatively buoyant with consumer sentiment strong. Like many otherindustries the transactions in the market are being driven in many instances by privateequity seeking high profile, branded quality investments.

HealthcareIn the healthcare sector the capital raisings broadly tracked in line with the prior year.Significant capital raisings in the past year included:

• DCA Group’s capital raising of $200 million through its hybrid security, HELTHYS(Hybrid Equity-Linked Trust-issued High Yield Securities), in November 2005.

• Healthscope’s capital raising of $128 million via its dividend reinvestment plan inSeptember 2005.

Transactions included Ramsay’s acquisition of Affinity hospitals, Healthscope’s subsequentacquisition of 14 hospitals from Ramsay and Ramsay’s sale of its aged care facilities.

Outside of these transactions, the aged care and retirement village industries continuedto feature in significant transactions. Primary examples included RCA’s (a MacquarieCapital Alliance subsidiary) acquisition of the Zig Inge Group and a portfolio offacilities from the Moran Group. DCA’s recently aborted plan to acquire the aged carefacilities of the Regis Group would have represented a major development in this sector,and further consolidation is inevitable.



Private equityIt was another strong year for the private equity industry in Australia, both in terms offunds raised and funds invested. Activity during the year was dominated by the buyoutsector of the market. Highlights of the year include Pacific Equity Partners and CHAMPbecoming the first Australian funds to raise around $1 billion and the world’s largestbuyout firm, KKR setting a new Australian private equity transaction record with theirfirst investment in the Australian market.

Australia continues to receive more attention from large international private equityfirms, including Asian regional funds such as Affinity, CVC Asia Pacific, Newbridgeand CCMP Capital Asia as well as international funds such as Carlyle and KKR.

Superannuation funds increased their portfolio allocations to private equity during theyear and Australian private equity ‘fund of funds’ continued to gain importance in themarket. Generally, the Australian private equity market continues to be relativelyunderdeveloped, as a proportion of both GDP and mergers and acquisition activity, in comparison to more mature overseas markets.

Significant exits• Quadrant Private Equity and Colonial First State Private Equity exited their

investments in Penrice Soda Holdings Ltd through an IPO, raising $80.5 million.

• CHAMP exited its investment in Austar by selling $298 million through a block tradeand $224 million off-market to a subsidiary of Liberty Global Inc.

• ABN AMRO realised its investment in AUSDOC through a trade sale to Brambles.

• Catalyst and Advent exited Taverner Group for $380 million.

Levels of funds raisedTotal funds under management were expected to exceed $14.5 billion by year’s end withmore than $3 billion being raised in 2005-06.

Significant new fundsLarge• PEP Fund III raised $1.2 billion (Pacific Equity Partners).

• CHAMP II raised $950 million.

Mid-market• Catalyst Buyout Fund 1 expects a final close at $375 million.

• CHAMP Ventures Investment Trust No. 6 raised $300 million.

• Quadrant Private Equity No. 1 raised $265 million.

• NEXT Capital 1 raised $265 million.



Key investments• The world’s largest buyout firm, KKR, completed Australia’s largest private equity

deal by purchasing the Cleanaway Australia and New Zealand businesses andIndustrial Services Australia from Brambles for $1.8 billion.

• Newbridge Capital and the Myer family completed the buyout of Myer DepartmentStores for $1.4 billion.

• CCMP Capital Asia completed the leveraged buyout of Waco International for $1.2 billion.

• Ironbridge led a consortium for a management buyout of Super A-Mart for $500 million.

• Pacific Equity Partners and CCMP Capital Asia undertook a buyout of the GodfreysGroup for $330 million.

• Quadrant Private Equity and Goldman Sachs JBWere (NZ) led the leveraged buyoutof 51 percent of Kathmandu Group for NZ$275 million.



IPO number and total value (1998-2006)

This year set records for IPOs with an impressive $11.9 billion raised in 164 transactions.Excluding the earlier Telstra T1 and T2 issues, 2005-06 saw the highest aggregate dollarraised by IPOs in a decade. In line with the previous two years, the latest year’s IPOactivity was driven by the buoyancy of the Australian share market and the weight ofmoney from superannuation. Other factors include the resources boom, activities in theprivate equity sector, the strong growth in company earnings and the performance of theAustralian economy, now in its 15th consecutive year of expansion.

While the main feature of 2004-05 was the sheer volume of IPOs, this year witnessedthe return of the ‘super floats’. Thus the year saw four IPOs exceeding the $1 billionlevel compared with none in the previous year. The average value of IPOs increasedfrom $53 million to $72.5 million per float. Likewise, the number of IPOs declined from185 to 164. There was also a decline in ‘micro floats’ (those below $5 million), whichfell from 62 to 50 issues. This decline ran counter to experience, as strong marketconditions traditionally produce a rush of small company floats.

Another trend for 2005-06 is the growing popularity of stapled securities. Although only10 listings used staple securities, they accounted for $4.7 billion of the $11.9 billionraised during the year. This is mainly due to the number of large trusts that listed in2005-06. In fact, six of the year’s 10 largest floats used stapled securities, including SPAusNet, Spark Infrastructure Group and Macquarie Media Group.

In terms of industry trends, utilities led the way with the listing of several large utilitytrusts. The food, beverage and tobacco sector was runner-up thanks to the float ofGoodman Fielder. After last year’s cashbox frenzy, IPOs by diversified financialsslumped from $3.2 billion to $518 million.

As in the previous year, New South Wales and Victoria topped the other states for fundsraised. However, Western Australia edged New South Wales for the number of IPOs, 66 and 52 respectively. As expected, Western Australia hosted a relatively large numberof small floats in the energy and materials sectors. The largest IPO in Western Australiawas the $463 million float by Alinta Infrastructure Holdings.


IPOs in detail

2000 2001 200219991998 2003

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Quarterly analysisIPOs quarterly analysis

2005-06 Q1 Q2 Q3 Q4 TotalNumber of IPOs 39 53 18 54 164Amount raised ($m) 1,546 7,830 141 2,370 11,8872004-05 Q1 Q2 Q3 Q4 TotalNumber of IPOs 48 57 33 47 185Amount raised ($m) 1,409 4,391 1,601 2,386 9,787

IPO activity started the year strongly with the first quarter experiencing a 10 percentincrease in capital raised compared with the corresponding quarter of 2004-05. It appears companies were taking advantage of buoyant equity markets that rose by 9 percent over the first quarter. Challenger Infrastructure Fund kicked off a big year forutilities by raising $157.5 million in August 2005. Other notable raisings during thequarter included the much anticipated $300 million float by Tattersall’s and the $171 million float by Reckson New York Property Trust.

Despite a correction in October, quarter two saw $7.8 billion raised – the highest singlequarter’s figure for the past three years. Three of the year’s billion dollar plus floatsoccurred in this quarter. Amazingly, all three of these floats (Goodman Fielder, SP AusNetand Spark Infrastructure Group) got away within six days of each other. They accountedfor two thirds of the capital raised in the quarter. Overall, it was a powerful demonstrationof the market’s liquidity and investor appetite for apparently good-quality shares.

Another transaction of interest in the second quarter was $550 million listing ofMacquarie Media Group. This float will raise a further $400 million in November 2006when the second instalment payment is due. This will give Macquarie Media Group a sizable war chest to take advantage of the expected media reforms. The FederalGovernment having now announced that it intends to discard the current cross-media and foreign ownership restrictions, thus opening the way for significant mergers andacquisition activity in this sector.

For the first half of 2005-06, the monies raised almost equalled the amount raised in theentire previous year.

The market took a breather in the third quarter. There were only 18 listings raising $141 million, significantly below the third quarter trend line. Companies in the materialssector accounted for seven of the 18 listings.

Activity picked up in the final quarter. Highlights included the Macquarie-backed $1.1 billion listing of Dyno Nobel, the $299 million float of copper producer Aditya BirlaMinerals and the highly successful $172 million float of wotif.com. The wotif.com listinggained considerable interest from the market. Through strong institutional support, itlisted at a premium of 66 percent, representing a price/earnings ratio of 36 times.



Ten largest floats by capital raisedCompany Industry Amount raised Listing Performance at

without calls ($m) premium (%) 30 June 2006 (%)Goodman Fielder Food, Beverage & Tobacco 2,649 2 7 SP AusNet Utilities 1,415 (6) (9)Spark Infrastructure Group [$1.80 partly paid] Utilities 1,145 (6) (10)Dyno Nobel Materials 1,075 13 4 Macquarie Media Group [$4.75 partly paid] Media 550 (2) 8 Alinta Infrastructure Holdings [$3.20 partly paid] Utilities 463 18 (15)Babcock & Brown Wind Partners Group Utilities 396 20 8 Tattersall's Consumer Services 300 19 (3)Aditya Birla Minerals Limited Materials 299 64 37 Rubicon Europe Trust Group Real Estate 259 2 (4)

The 10 largest IPOs raised $8.6 billion between them, almost double the $4.6 billion raisedby the previous year’s top ten. In fact, the 2005-06 top 10 represented 72 percent of the totalvalue of the year’s IPOs. The equivalent figure for the previous year was 47 percent.

The top 10 achieved a weighted average premium over issue price at the close of thefirst day’s trading of 5.28 percent compared with a 1 percent discount in 2004-05.Fifteen percent plus premiums were obtained by Aditya Birla Minerals, Babcock &Brown Wind Partners, Alinta Infrastructure Holdings and Tattersall’s. Dyno Nobel wasanother star performer, producing a 13 percent premium over issue price at the end ofthe first day’s trading. This is despite an issue price of $2.37 which was higher than theinitial indicative range of $1.89 to $2.27 per share. The stock was seen by investors asan opportunity to gain exposure to the resources sector through its supply of explosivesto the mining and quarrying industries.

Among the top 10, SP AusNet and Spark Infrastructure Group suffered 6 percent listingdiscounts. This may be due to market speculation about possible interest rate rises, sinceboth companies were interest rate sensitive due to their highly geared capital structure.In addition, both came to market hot on the heels of two other big utility floats, AlintaInfrastructure Holdings and Babcock & Brown Wind Partners Group, suggesting theymay have encountered a degree of investor fatigue.

Ten best performing IPOsCompany Industry Listing premium Amount raised Performance at

(%) without calls ($m) 30 June 2006 (%)Energy Metals Energy 112 3.0 624 Monaro Mining Materials 43 3.0 355 Red Hill Iron Materials 140 4.0 350 Hindmarsh Resources Energy 79 0.6 293 Dyesol Capital Goods 10 2.5 235 Elemental Minerals Materials 20 3.0 210 Odyssey Energy Energy 23 5.0 190 Pryme Oil & Gas Energy 30 7.0 188 Valhalla Uranium Energy 38 8.0 170 Nova Energy Energy 43 6.0 168

Similar to prior years, small floats dominated the best performing list. Small floats tendto offer larger discounts in order to attract investors. In addition, the 10 best performingIPOs had fairly low issue prices (i.e. $0.20 to $0.40 per share), hence a small increase inshare price resulted in a disproportionately large increase in percentage return.

The best performing list reflected the resources boom experienced over the past fewyears. Nine of the 10 best performing floats were in the energy and materials sectors.Dyesol, the sole exception to this trend, is indirectly involved with the energy sector.



Dyesol works on the development and supply of solar cell equipment and technology.

As forecast in last year’s survey, uranium attracted plenty of interest in 2005-06. Four ofthe 10 best performing IPOs were involved principally with uranium exploration anddevelopment. This includes Energy Metals, Hindmarsh Resources, Valhalla Uranium andNova Energy.

Ten worst performing IPOsCompany Industry Listing premium Amount raised Performance at

(%) without calls ($m) 30 June 2006 (%)RUN Corp Real Estate (2) 25.0 (84)Purus Energy Energy 7 9.0 (75)Cumminscorp Commercial Services & Supplies (25) 15.0 (70)Buka Gold Materials (2) 12.0 (66)Australian Oil Company Energy (25) 6.0 (63)AtCor Medical Holdings Health Care Equipment & Services 40 15.0 (61)Eldore Mining Corporation Materials 16 4.0 (56)XTEK Technology Hardware & Equipment 36 14.0 (56)Capital Intelligence Consumer Services 0 3.0 (53)Rey Resources Energy (34) 5.0 (48)

Small floats also dominated the worst performing list. RUN Corp, a residential propertymanagement company, was the worst performer with its share price decreasing from$1.00 to $0.165 in just over six months.

Companies in the energy and materials sectors accounted for half of the 10 worstperforming IPOs. This is not surprising given the highly speculative nature of thesesectors. In the materials sector, 60 percent of the floats ended the year without posting a gain.

IPO analysis by industryIndustry group Amount raised Industry Number Average Listing Performance to

without calls as a % of of IPOs IPO size premium 30 June 2006($m) total raised ($m) (weighted avg) (weighted avg)

% %Utilities 3,716 31.26 8 464 0.64 (9.26)Food Beverage & Tobacco 2,689 22.62 3 896 2.11 6.99 Materials 1,668 14.03 50 33 21.82 9.24 Real Estate 1,057 8.89 13 81 2.87 2.19 Media 550 4.63 1 550 (1.82) 8.36 Diversified Financials 518 4.36 9 58 5.96 1.58 Consumer Services 373 3.14 5 75 14.43 (6.49)Retailing 320 2.69 4 80 39.43 62.68 Energy 320 2.69 33 10 23.05 31.59 Capital Goods 134 1.13 9 15 29.38 56.11 Insurance 90 0.76 1 90 10.50 57.50 Telecommunication Services 88 0.74 3 29 8.46 42.90 Commercial Services & Supplies 85 0.72 5 17 3.21 4.75 Software & Services 135 1.14 4 34 8.18 13.95 Health Care Equipment & Services 55 0.47 7 8 21.41 (0.43)Transportation 36 0.30 2 18 (2.09) (0.81)Pharmaceuticals, Biotechnology & Life Sciences 23 0.19 5 5 6.00 50.60 Consumer Durables & Apparel 16 0.13 1 16 0.00 2.00 Technology Hardware & Equipment 14 0.12 1 14 36.00 (56.00)Total 11,887 100.00 164 72



As previously indicated, the utilities sector led the way in terms of the value of fundsraised. This sector would have had an even more spectacular year if the $3 billionSnowy Hydro float had gone ahead. The average float value for utility companies was$464 million compared with $313 million in 2004-05.

The materials sector experienced a significant increase in total funds raised, which wereup from $400 million to $1.7 billion for the year. For the third year running thematerials sector accounted for the largest number of individual IPOs. Metals and miningcompanies took advantage of the resources boom and accounted for 48 of 50 floats inthe materials sector. The majority of floats were small, speculative offerings. Notableexceptions were the Dyno Nobel and Aditya Birla Minerals floats. Excluding these twooffers, the size of the average capital raising by materials companies was $6.1 million,which was lower than the corresponding figure for the previous two years.

IPO activity in the diversified financials sector decreased significantly, as noted above.Transport suffered a similar decline. Two of the previous year’s largest IPOs were in thissector, but there were no comparable floats in the latest year.

IPO performance by sizeAmount raised without calls ($m) Number Amount % of Listing Performance to

of IPOs raised total raised premium 30 June 2006($m) (weighted avg) (weighted avg)

% %> $1bn 4 6,284 52.9 0.76 0.24 $500m - $1bn 1 550 4.6 (1.82) 8.36 $100m - $500m 14 3,039 25.6 18.19 2.96 $25m - $100m 27 1,226 10.3 9.50 25.97 $10m - $25m 22 352 3.0 17.81 (1.43)$5m - $10m 46 289 2.4 14.39 17.23 < $5m 50 146 1.2 18.81 40.66

Analysis suggests that in 2005-06 there was a slight inverse correlation between IPOsize and subsequent price performance. Listing premiums and subsequent share priceperformance generally improved as IPO size diminished.

Smaller floats tend to be inherently more risky than their larger counterparts. Thesecompanies may offer larger issue price discounts to attract investors. It is also possiblethat larger IPOs are more finely priced through a book build process, reducing the sizeof subsequent listing premiums.

Dividend yield summaryConsistent with the previous year, only 36 of the year’s listings provided dividendforecasts in their prospectuses. Eight of the latest year’s 10 largest IPOs provideddividend forecasts. This probably reflected the fact that the year’s top 10 includedseveral yield driven trusts.

Forecast annual dividend yields ranged from 2.7 percent for Aditya Birla Minerals to 10 percent for CMA Corporation. This was a lower range than in the previous year,when forecasts ranged from 3.3 percent to 11.5 percent. The average dividend yieldforecast was 7.08 percent compared with 7.30 percent in 2004-05.



Cost of listingTotal amount sought through IPO Number Average total cost ($m) % of amount sought> $1bn 4 64.09 3.63$500m - $1bn 1 25.00 2.63$100m - $500m 14 14.81 6.05$25m - $100m 27 2.95 7.77$10m - $25m 22 1.27 7.83$5m - $10m 46 0.56 9.42< $5m 50 0.32 10.83Total 164 6.88

Underwriting cost Number Average total cost ($m) % of amount sought> $1bn 0 N/A N/A$500m - $1bn 0 N/A N/A$100m - $500m 11 7.71 2.83$25m - $100m 19 1.62 3.45$10m - $25m 10 0.62 4.24$5m - $10m 12 0.26 3.99< $5m 3 0.10 3.05Total 55 3.51

The weighted average cost of listing as a percentage of the capital sought has been on anupward trend for several years. It has grown from 6.68 percent in 2004-05 to 6.88percent in 2005-06. As seen in previous years, there was an inverse relationship betweenthe size of a capital raising and the cost of listing as a percentage of the amount sought.

Who delisted and whyMost of the companies that departed the ASX during the year did so as a consequenceof mergers and acquisitions. There were, however, some exceptions.

• Technology Investment Fund opted to delist and allow unitholders to redeem units atnet asset value. The fund has struggled with low liquidity on the ASX in recent times.The delisting gave unitholders the opportunity to realise their investment in the fund.

• Canning Energy was delisted after it undertook a large share buyback funded by thesale of the company’s share portfolio. The remaining assets were insufficient tojustify the expense of listing.

• Several companies delisted to trade solely on overseas exchanges. Both VirotecInternational and Novera Energy decided to trade only on London’s AlternativeInvestment Market (AIM), citing their long-term European business focus. Tat HongHoldings gave a lack of liquidity and insufficient Australian shareholders as thereasons for deciding to list only in Singapore.



Last year’s listings: where are they now?Last year’s top 10 performersCompany Industry group Performance Performance Ranking at

at 30 June 2005 at 30 June 2006 30 June 2006(%) (%)

Allco Hybrid Investment Trust Diversified Financials 430 460 4OmegaCorp Materials 350 960 2Jumbuck Entertainment Software & Services 300 1,085 1Tomahawk Energy Energy 300 120 36Global Properties Real Estate 275 85 43Aurox Resources Materials 210 175 23Matilda Minerals Materials 195 180 21Babcock & Brown Diversified Financials 176 334 9Bluestone Tin Materials 168 (20) 125Australis Aquaculture Food Beverage & Tobacco 160 56 57

Current performance of 2004-05 financial year IPOsCompany GICS industry group Performance

at 30 June 2006(%)

Jumbuck Entertainment Telecommunication Services 1,085OmegaCorp Materials 960Iron Ore Holdings Materials 475Allco Hybrid Investment Trust Diversified Financials 460Carrick Gold Materials 425PIPE Networks Telecommunication Services 425Bannerman Resources Materials 420Mirabela Nickel Materials 360Babcock & Brown Diversified Financials 334Liquefied Natural Gas Energy 303

Of last year’s top 10 performers, four further improved their performance during 2005-06. Four of the previous year’s top 10 remained within 2005-06’s top 10performers as of 30 June 2006. The majority of the previous year’s top 10 performerswere fairly speculative floats, with six of them raising less than $5 million each.

Bluestone Tin was the poorest performer among 2004-05’s top 10 as the tin price felland the company suspended mining operations.

Top five performers at 30 June 2006 (analysis of top 10 performers from the past fivefinancial years)Company Industry group Year Rank in Performance Performance

listed year listed at 30 June of at 30 June 2006year listed (%) (%)

City Pacific Diversified Financials 2001-02 1 690 1,775Home Building Society Banks 2001-02 3 180 1,370Independence Group NL Materials 2001-02 7 78 1,260Jumbuck Entertainment Telecommunication Services 2004-05 3 300 1,085OmegaCorp Materials 2004-05 2 350 960

For the first time this year, KPMG reviewed the top 10 performers from the past fivefinancial years. The table above shows the top five performers at 30 June 2006 from this universe.

Of the 10 top performers from each of the past five years, eight were trading below theirissue price at 30 June 2006. Two more companies have been suspended from trading andplaced in administration. This is consistent with the fact that historically, top 10 performerswere generally small speculative floats, resulting in greater share price volatility.



Cashboxes: where are they now?A feature of 2004-05 was the ‘cashbox’ phenomenon. These floats asked investors to puttheir money into investment vehicles with no history, no existing investments and, insome cases, no clearly articulated investment strategy. Last year’s three largest cashboxofferings were Babcock & Brown Capital ($500 million), Macquarie Capital Alliance($500 million) and Allco Equity Partners ($183 million). All three investment vehicleswere trading below their issue price10 at 30 June 2006.

Generally, the cashboxes struggled to find suitable, well-priced investment opportunities.Allco Equity Partners listed in December 2004, but did not announce its first proposedinvestment (the proportional takeover offer for Baycorp Advantage) until July 2005.Babcock & Brown Capital waited almost eight months before announcing its firstinvestment, which was in the Irish telecoms company, Eircom. However, MacquarieCapital Alliance bucked the trend, announcing its first acquisition on the same date itlisted on the ASX. Macquarie Capital Alliance has been the only fund of the three to befully invested through its latest acquisition of ASI Holding Corp.

Given the weight of money flowing into the market and the increase in private equityactivity, cashboxes are likely to encounter stiff competition for good investmentopportunities for some time to come.

10 Issue price is defined as the sum of all installments paid up to 30 June 2006.



In December 2005 KPMG commissioned a survey (Thinking of an IPO?) to examinethe experiences and views of the companies that had recently floated and listed on theASX. The survey looked at the costs and benefits of listing, unexpected outcomes, thedemands on management and the lessons of hindsight. Although each IPO is a uniqueevent, our survey identified several themes common to many companies undergoing theIPO experience.

• Make sure the business’ finances and operations are sound.

• Consider the alternatives to listing. Becoming a public company brings with it newresponsibilities and obligations. Allow a ‘cooling off’ period and do your homeworkbefore taking the IPO plunge.

• Allow for the management time and resources an IPO will absorb. Who will mind theshop when the IPO is in full swing?

• Obtain the full commitment of the company’s key people: chairman, CEO,CFO/finance director, company secretary, in-house lawyer.

• Take time to plan the process thoroughly, understand the work involved and set arealistic timetable.

• Seek appropriate professional advice from the outside and make sure your advisersare experienced in the IPO process.

• Prepare for the culture shock of going public, including the elevated levels ofdirectors’ and managers’ liability, increased external scrutiny and tougher reporting,compliance and governance obligations.

Thinking of an IPO?



This section looks at the net outflows of funds for Australian equities.

Share buybacksAs discussed previously, share buybacks have become increasingly prevalent ascompanies look for ways to manage excess capital and improve shareholder return onequity. To some extent the recent increase in share buybacks and in the size of cashdividends reflect limited growth opportunities in the domestic market, making highercash returns to shareholders a more acceptable option.

Share buybacks have also been used as a method of privatisation. A recent example isCentral Equity, a property developer and manager based in Melbourne. The company’sthree founding directors have conducted a $67.5 million share buyback and then delistedthe company from the ASX. This was in response to shareholder dissatisfactionregarding company profits and management remuneration.

During the latest year 90 companies undertook share buybacks with a total value of $6.1 billion. The comparable figure for 2004-05 was $7.1 billion.

Top five share buybacks for 2005-06Value ($m)

BHP Billiton 2,250Westpac Banking Corporation 1,000Rinker Group Limited 382Commonwealth Bank of Australia 336CSL Limited 320Total 4,288

Riding the resources boom, mining giants BHP Billiton and Rio Tinto announced majorcapital management programs during the year. BHP Billiton completed a US$2 billioncapital return that included an off-market buyback of Australian shares and an on-market purchase of shares traded on the London Stock Exchange. Because of strongdemand, the Australian buyback was upped from $1.5 billion to $2.25 billion. The finalbuyback price of $23.45 per share was at a 14 percent discount to market price,illustrating how the tax treatment of off-market buybacks remains highly attractive tosome investors. For its part, Rio Tinto announced Australia’s largest capital managementprogram after reporting annual net earnings of US$5.5 billion in February 2006. The US$4 billion program includes a special US$1.5 billion dividend and an on-marketshare buyback of US$2.5 billion to be completed by the end of 2007.

Westpac conducted the second largest share buyback in 2005-06. The buyback wasconducted off-market and shareholders tendered over $2 billion of shares. The strongdemand led to Westpac increasing the share buyback from $700 million to $1 billion.The buyback price was set at $19.13 per share, which represented a 14 percent discountto the then market price.

Overall, companies in the diversified financials sector were the most active inundertaking share buybacks. Commonwealth Diversified Share Fund and InternationalWine Investment Fund conducted notable buybacks.

Share buybacks, dividends paid and takeovers



Dividends declared/paidFor the year the dividend yield across the market was 3.39 percent, down fractionally onthe previous year’s 3.54 percent. Listed companies declared or paid $38.7 billion individends during the year and the net cash outflow from dividends into the market was$31.4 billion following the $7.3 billion accounted for by DRPs.

Takeovers and divestmentsThe first six months of 2005-06 saw US$38.1 billion11 of completed deals. They reflectsubstantial activity in the utilities sector. The second half saw a further US$22.0 billionof completed deals, including the Toll-Patrick and Alinta-AGL transactions. However,takeover and investment activity declined significantly compared with 2004-05. Thisdecline occurred against the global trend of increased activity, especially in NorthAmerica, Western Europe, India and China.

Top 10 deals for 2005-06Date Effective Target Target Nation Acquirer Acquirer Nation Value

(US$m)25-May-06 Patrick Corporation Limited Australia Toll Holdings Limited Australia 4,406.4704-Jul-05 Yellow Brick Road Netherlands European Directories SA Australia 2,339.7409-Nov-05 Foodland Associated Limited -

New Zealand Business New Zealand Woolworths Limited Australia 2,153.7519-Sep-05 Dyno Nobel ASA Norway Investor Group Australia 1,697.6421-Dec-05 ETSA Utilities Australia Spark Infrastructure Group Australia 1,557.8318-Nov-05 Mayne Pharma Pty Limited Australia Shareholders Australia 1,343.1221-Feb-06 Australian Gas Light Company Australia Alinta Limited Australia 1,305.1216-Nov-05 Rabobank Australia Limited -

Loan Portfolio Australia AWB Limited Australia 1,154.8230-Nov-05 Southern Hydro Limited Australia Australian Gas Light Company Australia 1,066.0414-Dec-05 Kobenhavns Lufthavns A/S Denmark Macquarie Airports Australia 951.06

As can be seen from the table, utility companies dominated takeover and divestmentactivity during the year. Alinta’s takeover bid for the much larger AGL ‘threw a spanner’in AGL’s plans to de-merge into two listed businesses by separating its retail andmerchant energy assets from its infrastructure assets. The situation appears to have beenresolved (subject to approvals) as the two companies agreed to merge and then de-mergeinto two listed entities – one holding the competitive assets and the other holding theregulated assets.

Other significant utilities deals included AGL’s acquisition of the renewable electricitygenerator, Southern Hydro, from Meridian Energy and Alinta’s float of AlintaInfrastructure Holdings. The latter contains the distribution and generation assetspurchased from Duke Energy in 2004.


11 Figures supplied by Thomson Financial. They are a comprehensive analysis of data on domestic and cross-border mergers, acquisitions and strategicinvestments completed during the calendar year.


A highlight of the second half of 2005-06 was the conclusion of Toll’s drawn outtakeover battle for Patrick. The initial hostile takeover bid was launched in August 2005.Several factors complicated the bid, including problems in obtaining regulatoryapprovals from the Australian Competition and Consumer Commission (ACCC),lawsuits launched by both parties and the mooted last-minute attempt to form aconsortium to bid for Patrick by Macquarie Bank. The transaction was not concludeduntil May 2006.

At year’s end several significant deals remained in the pipeline. These included theproposed $1.6 billion friendly takeover of Smorgon Steel Group by OneSteel and the $4 billion merger between UNiTAB and Tattersall’s (and a subsequent hostile bid forUNiTAB by Tabcorp). The $2.3 billion deal involving the ASX and the Sydney FuturesExchange was completed in early July 2006.



The markets are also affected by regulatory, tax and accounting changes. Some of thekey changes during the year are summarised below.

Better prospectus disclosureThe Australian Securities and Investment Commission (ASIC) released draft guidelines onpreparing prospectuses in a clear, concise and effective manner. ASIC’s guidelines suggest:

• making prospectuses as short as possible

• leaving out extraneous material

• highlighting critical information

• organising information in a logical manner

• providing clear navigation around the document

• incorporating technical and other detailed information by reference

• writing in plain and direct language

• using appropriate communication tools, including graphics and illustrations.

Amendments to ASX listing rulesThe ASX regulatory policy unit proposed the following additional information should bedisclosed around bookbuilds.

• Information about the actions taken to fill the book or manage a possible shortfall,including concessional fees offered to certain allottees.

• Conduct or arrangements that results in certain allottees paying a price different fromthe bookbuild price announced by the issuer.

• Conduct or arrangements that make the value of the consideration for each securitypassing from certain allottees different from the bookbuild price announced by the issuer.

Standard & Poor’s changes to ratings criteria appliedto hybrid securitiesStandard & Poor’s has revised its treatment of ‘intermediate equity content’ as applied tohybrid securities. Under the new criteria, hybrids that are considered intermediate equityare treated as 50 percent debt and 50 percent equity. Standard and Poor’s has regard to thefollowing criteria when considering the equity-like nature of a given hybrid instrument.

• No ongoing payments that could lead to default.

• No maturity or repayment required.

• Provides creditor buffering following a default.

• Commitment by issuer to retaining the instrument as a permanent feature of itscapital structure.

Regulatory climate



Securities which are able to satisfy some or all of the requirements will have a greaterchance of obtaining intermediate equity status.

TaxationTax losses and M&A activitiesThe Australian taxation regime for the utilisation of tax losses dramatically changed in 2006.

A more compliance friendly version of the continuity of ownership test has emerged forwidely held corporate groups. The trade-off for large businesses (i.e. those with greaterthan $100 million annual turnover) is the abolition of the alternative same business testfor losses incurred in income years commencing on or after 1 July 2005. The after taxreturns for acquisitions or capital raisings which trigger a change of ownership are likelyto be significantly different under this new tax losses regime. Those sectors, such as theinfrastructure and resources industry, where there are large upfront costs with deferredrevenue streams and which often rely on capital raisings or merger activity to financegrowth, will be significantly affected by this regime.

AIFRS and taxThe adoption of AIFRS has had a number of flow-on taxation consequences.

For example, the AIFRS accounting rules for business combinations coupled with thenew taxation regime for entities entering and exiting tax consolidated groups mean wenow have a number of new merger and acquisition challenges. If we also overlay thenew AIFRS tax effect accounting rules (including AIFRS accounting for taxconsolidated groups) and the abovementioned tax loss changes, it quickly becomesapparent that merger and acquisition tax due diligence processes of even a few years agoare now well and truly outdated.

Some of the other AIFRS tax consequences that prompted legislative responses include:

• In 2005, Australia had to modify its thin capitalisation tax regime to accommodateAIFRS. Not to have done this would have seen some companies failing the thincapitalisation safe harbour limits, even though there was no change to the underlyingbusiness itself.

• In 2006, Australia reintroduced share capital tainting provisions. These provisionsseek to ensure that companies do not distribute profits to shareholders in the guise oftax-free returns of capital rather than dividends.

AIFRS and the capital marketsIn April 2006, KPMG commissioned a survey of Australian financial analysts todetermine their familiarity with, and understanding of, AIFRS. It replicated our firstsurvey conducted in late 2004 on the same subject.

Since our first survey, there has been an encouraging uplift in analyst understanding andreadiness for financial reports produced under AIFRS. Most analysts report a reasonableknowledge of AIFRS, but the depth and breadth of this understanding remains patchy.However, over three quarters of analysts surveyed are confident they can distinguishbetween changes in reported numbers resulting from changes in underlying businessperformance versus changes in accounting methodology. Analysts remain divided in theirview on whether AIFRS will provide more or less insight into company performance.



International Financial Reporting Standard 3 and itseffect on acquisitionsIn the past, intangible assets that formed part of an acquisition were usually placed in a big pot marked ‘goodwill’. This goodwill was generally amortised evenly over aspecified period, commonly 20 years. Under IFRS 3 (and AASB 3), acquirers mustdelve into that big pot of goodwill to separately recognise any intangible assets forwhich a fair value can be reliably established. Importantly, the valuation of intangibles is not a one-off exercise. Companies will have to carry out annual impairment tests tocheck and, if necessary, correct the value of goodwill and indefinite life intangibles.

The departure from straight-line amortisation and the potential to manipulateamortisation is likely to result in more ‘lumpy’ profit and loss results. In a world whereearnings per share are still seen as a primary value measure, many analysts will questionthe wisdom of any deal that does not appear to enhance earnings in the short-term.However, accounting treatment should never cloud strategic thinking. A good deal is stilla good deal and cash ultimately will always be king. The simple message to acquiringcompanies is to plan the structure of any deal and develop a strategy of communicatingthe likely results.

Basel II AccordBasel II is an effort by international banking supervisors to update the originalInternational Bank Capital Accord (Basel I), which has been in effect since 1988. It aims to improve the consistency of capital regulations internationally, make regulatorycapital more risk sensitive, and promote enhanced risk-management practices amonglarge, internationally active banking organisations.

Basel II will have a significant impact on the risk management infrastructure offinancial institutions. For advanced financial institutions in Australia, the ability tomeasure risk more precisely will allow them to pursue a range of additional benefits.However, there are significant costs to implement Basel II, in some cases well in excessof $100 million, and it remains to be seen whether some of these costs will be borne bythe financial institutions’ customers and which ones.



The new financial year came upon us in a more uncertain climate than had beenexperienced for some years.

Equity marketsAfter three consecutive years of double digit returns, many investors are wondering howlong the bull run will continue.

To put it in perspective, it took nine years for the Australian All Ordinaries’ Index toregain its 1987 pre-crash high of 2318 and a further two-and-a-half years to break 3000.The 4000 level was a further five-and-a-half years away (December 2004), but it tookjust another 16 months to breach 5000. How long might it take to reach 6000?

Demand for mineral and energy commodities is likely to remain strong. For calendar year2006, the International Monetary Fund forecasts annual GDP growth of 3.4 percent and9.5 percent for the US and China respectively. China is showing little sign of a majorslowdown despite an interest rate rise in April. Growth in commodities’ output is beingconstrained by a number of factors including skilled labour issues and long project leadtimes. Taken together, these factors suggest commodity prices should remain firm for atleast the coming year.

In Australia, superannuation contributions will continue to flow into equities. In 2004-05alone contributions to superannuation funds amounted $65.9 billion.12 At 31 March2006, the total estimated superannuation assets were $905.4 billion, representing a year-over-year increase of 24 percent.13 This is serious money in anyone’s terms. Fundmanagers have to find homes for this money, much of which is likely to go intoAustralian equities. An increasing portion is also flowing offshore. This trend is shownby the fact that the unconsolidated assets of superannuation funds invested overseas haveincreased by 46 percent year-over-year to $152 billion.14

Australian equities have also been helped by solid economic growth. The Reserve Bankis forecasting a moderate annual GDP growth of 3 to 3.5 percent through to the end of2007. The Federal Government’s tax cuts may put pressure on this. There is someconcern they might stimulate consumer spending, leading to higher inflation and a further rise in interest rates. Rising petrol prices are also a concern not only forconsumers but for their flow on effect through industry. In addition, the market remainsextremely cautious regarding further interest rate rises in the US.

Similar to last year, the level of calls issued by companies in the current financial yearwill have a significant influence on capital market activity over the next year. Of thecompanies that listed during 2005-06, seven companies used instalments as a method ofpayment, hence deferring almost $1.7 billion in payments. The largest deferred capitalcontributions will be due to Spark Infrastructure Group ($671 million), MacquarieMedia Group ($400 million) and Alinta Infrastructure Holdings ($277 million).

It will be interesting to see if the volatility of May and June 2006 has a lasting impacton 2006-07. The 2004-05 financial year experienced a similarly timed domesticdownturn but the Australian equity market rebounded in 2005-06. However, unlike lastyear, this market volatility has been experienced on a global basis. This may causeadditional volatility for the Australian market during 2006-07.

Outlook for 2006-07

12 Annual Superannuation Bulletin. Australian Prudential Regulation Authority, 20 April 2006.13 Quarterly Superannuation Performance. Australian Prudential Regulation Authority, 29 June 2006.14 Managed Funds. Australian Bureau of Statistics, 19 June 2006.



As is always the case, market volatility allows companies to make opportunistic bids bytaking advantage of price weaknesses. A recent example of this was the hostile bid forGasNet Australia by Babcock & Brown Infrastructure and Australian Pipeline Trust.

The potential for interest rate rises may pull acquisition multiples back and also putpressure on highly geared companies and asset classes (e.g. infrastructure). Furtherinterest rate hikes, record oil prices and potential shocks to the market such as a terrorismattack could severely dent consumer confidence and stop the market’s impressive growth.

Hybrid securitiesThe popularity of hybrids is likely to remain strong in the current year.

Companies will continue to issue hybrid securities in a bid to strengthen their balancesheets and lower their cost of capital. The changes implemented by credit rating agencyStandard & Poor’s to the treatment of hybrid securities should also act as a stimulus forhybrid issues.

As the hybrid market matures, there will be increased diversity in issuers and industries.Although banks and insurance companies have traditionally dominated the hybridmarket, the 2005-06 financial year saw an increasing number of companies outside ofthese sectors issue hybrids. The success of hybrid issues by Orica, Woolworths andothers should encourage other companies to follow suit.

The past two years have seen a shift away from reset preference shares to step-uppreference shares (SPS), which can be classified as equity under AIFRS. This trendshould continue in the current year. However, not all investors are happy with this shift.SPS generally offer lower cash coupon rates with a step-up of between 200 to 250 basispoints five or 10 years after the issue date. There is concern that the step-up may be aninsufficient economic incentive for companies to redeem the securities, leaving investorswith limited exit options. Despite these concerns, demand for hybrids is expected to bemoderate to strong, mainly reflecting the lack of supply in the hybrid credit market andweight of money looking for a home.

DebtGoing forward, the Australian debt market is expected to continue to be driven by acombination of refinancing and merger and acquisition activity. In particular, signs ofoverheating in both the US and European LBO markets indicate that private equityplayers will continue to look towards Australia to provide suitable investmentopportunities, thereby generating continued growth in the leveraged finance market.

The current year should also see a continuation of strong bank liquidity resulting from low credit losses. This is likely to be supported by strong underlying fundamentals in the economy.

Offshore banks will continue to increase their presence in Australia, covering both thesmall and medium sized enterprises debt market, as well as the corporate and institutionaldebt markets. This will further add to market liquidity and the banks’ appetite to do moredeals. But, as history shows us, markets operate in cycles – this environment offavourable borrower conditions is not expected to continue into perpetuity. Nevertheless itis difficult to pinpoint the moment at which the cycle reverses.



IPOsThe 2006-07 financial year has the potential to be another strong year for IPO activity.Indeed, quite a few major transactions have already been pencilled in for the current year.

For example, Emeco is expected to raise approximately $1 billion in July 2006. Based inWestern Australia, Emeco supplies heavy earthmoving equipment, especially to themining industry. The company offers an indirect exposure to the resources sector and assuch could prove popular with investors.

Upcoming privatisations include the Brisbane North-South Bypass Tunnel (expected$700 million plus) and Medibank Private (up to $2 billion). At 30 June 2006 it wasunclear whether Medibank Private would be sold via an IPO or a trade sale.

Of course, the big unknown for 2006-07 is Telstra T3. The Federal Government hasassumed in its last budget that the sale of its remaining 51.8 percent stake in Telstrawould take place in 2006-07. However, a final decision is unlikely until Telstra reachesagreement with the ACCC over access to its proposed $3 billion broadband network.

The 2005-06 financial year saw a number of foreign companies listing their Australianoperations in Australia, in order to take advantage of the weight of money available inthe market. These included Singapore Power (SP AusNet), Hong Kong’s Cheung KongInfrastructure (Spark Infrastructure) and India’s Hindalco Industries (Aditya BirlaMinerals). It will be interesting to see if this trend continues for 2006-07.

Private equityAustralia will continue to receive more attention from large international private equityfirms, with some foreign firms looking for local partners on deals. The year ahead willalso see the Australian private equity market becoming more segmented with theemergence of funds specialising in sectors such as large buyouts, mid-market buyoutsand secondary buyouts.

Greater competition between private equity funds will see higher multiples being paidfor key investments by the larger buyout funds. These higher prices may lead to privateequity firms increasing their focus on creating value by driving operational improvementrather than trying to generate returns through financial engineering or multiple arbitrage.

There could be a shortage of investment opportunities and greater availability of fundswill lead to deals increasing in both size and volume, and may also make larger scalepublic to private deals more likely.

In terms of existing opportunities, providing that equity markets remain reasonablybuoyant, there may be opportunities for private equity investments to be realised throughIPOs and secondary buyouts will become increasingly common as the private equitymarket matures.



Significant IPOsPacific Equity Partners and Archer Capital (formerly GS Private Equity) are exitingtheir investment in Emeco, as previously mentioned, through an IPO in July 2006.

Significant investmentsPotential trade buyers are likely to face strong competition from the larger private equityfunds when Independent Distillers is offered for sale in around September 2006. The price of the New Zealand based business is expected to be up to $1.1 billion.

Major fund raisingsLarge• Ironbridge Capital is seeking $800 million to $1 billion for a new fund.

Mid-market• Advent V expects to raise $300 million.

• Archer Capital Growth Fund expects to raise $160 million.

Industries to watchEnergy and natural resourcesThere are concerns that the resources boom has attracted many new players to thecommodities market looking to reap an immediate profit. This may result in increasedvolatility in commodity prices driven by speculative buying and selling rather than thefundamentals such as underlying supply and demand.

As predicted in last year’s survey, uranium stocks attracted plenty of interest in the2005-06 financial year and will likely remain a hot topic in the 2006-07 financial year.A factor driving the uranium debate has been the push for environmentally friendlyenergy sources. As oil prices continue to rise, alternative energy companies will likelyreceive additional focus and investment.

The next big challenge for the metals and mining sector will be overcominginfrastructure bottlenecks. As the big players continue to expand mine sites, theavailability of suitable road, rail and port access will be key to continued growth.Companies in this market are likely to see increased demand for their services andsubsequent price rises.

Transport and logisticsToll’s takeover of Patrick will have a significant flow on effect on the transportationindustry for the next few years. The other players in the transportation industry arelooking at effective ways to compete against the Toll-Patrick conglomerate. AlreadyQueensland Rail has acquired stakes in bulk carrier Australian Railroad Group andannounced plans to develop a second national freight network. It is also looking atstrategic alliances with other transportation companies. Further consolidation within thetransportation industry is likely as companies look to build scale.



Another factor boosting the transportation sector is the significant infrastructureinvestment expected in the next few years. The government-owned Australian Rail TrackCorporation has indicated that it will invest $1.4 billion over the next three-to-four yearsin the Melbourne-Sydney-Brisbane rail corridor. The New South Wales government hascommitted $1.5 billion to improve capacity and reliability of CityRail’s Sydneysuburban network.

Real estateThe real estate sector expects increased activity in the 2005-06 financial year.

Tax cuts and superannuation reforms announced as part of the federal budget will likelyresult in additional investments in the property sector. Fund managers will be underpressure to find investment-grade properties that offer a balance of income and capitalgrowth. This increased demand could result in redevelopment of existing assets andhigher construction levels in the non-residential sector. Fund managers may also lookoverseas for potential property investments.

Consumer markets and HealthcareIn the coming year we expect to see a number of private companies consider an exit(partial or whole) and further consolidation in adjacent sectors such as food distribution.In the retail sector we anticipate a number of small to medium transactions occurring,predominantly in the apparel arena.

For the healthcare industry, we see consolidation continuing in the coming year andbelieve the realignment of social infrastructure owners, managers and operators may bea major feature of the sector moving forward.




Appendix I:Full listing of IPOs for the 2005-06 financial year

Closing tradeListing date Company Industry name Issue price on listing date

$ $ % %

04-07-05 Penrice Soda Holdings Materials 1.93 1.9607-07-05 Tattersall's Consumer Services 2.90 3.4608-07-05 Becton Property Group Real Estate 0.50 0.5211-07-05 Hindmarsh Resources Energy 0.28 0.5012-07-05 CMA Corp Capital Goods 0.40 0.5012-07-05 S8 Property Trust Real Estate 1.00 1.0315-07-05 Louisiana Petroleum Energy 0.20 0.3215-07-05 Red River Resources Materials 0.20 0.2122-07-05 Wellcom Group Commercial Services & Supplies 1.00 1.2525-07-05 Cell Aquaculture Capital Goods 0.20 0.1726-07-05 Trafalgar Corporate Group Real Estate 3.00 3.1328-07-05 APN European Retail Trust [$1 partly paid] Real Estate 0.70 0.7402-08-05 Goldlink Growth Plus Diversified Financials 1.00 1.0511-08-05 Evogenix Pharmaceuticals, Biotechnology & Life Sciences 0.25 0.2812-08-05 BBX Holdings Commercial Services & Supplies 0.25 0.2415-08-05 Neurodiscovery Pharmaceuticals, Biotechnology & Life Sciences 0.20 0.2019-08-05 Challenger Infrastructure Fund [$3.50 partly paid] Utilities 1.75 1.7823-08-05 Nova Energy Energy 0.40 0.5723-08-05 Western Plains Gold Materials 0.20 0.2225-08-05 Zinico Resources Materials 0.20 0.1726-08-05 Accent Resources Materials 0.20 0.1931-08-05 Dyesol Capital Goods 0.20 0.2231-08-05 Korab Resources Materials 0.20 0.2709-09-05 Energy Metals Energy 0.25 0.5314-09-05 Livingstone Petroleum Energy 0.20 0.3814-09-05 Purus Energy Energy 0.20 0.2214-09-05 Viridis Clean Energy Group Utilities 1.00 1.0615-09-05 Monaro Mining Materials 0.20 0.2915-09-05 XTEK Technology Hardware & Equipment 0.50 0.6816-09-05 Allco Max Securities and Mortgage Trust Diversified Financials 1.00 0.9816-09-05 Norton Gold Fields Materials 0.20 0.2221-09-05 Contact Resources Materials 0.20 0.2821-09-05 Elemental Minerals Materials 0.20 0.2421-09-05 Monax Mining Materials 0.20 0.3622-09-05 Clive Peeters Retailing 1.00 1.0622-09-05 Rawson Resources Energy 0.20 0.1923-09-05 Mariner American Property Income Trust

[$1 partly paid securities] Real Estate 0.60 0.6226-09-05 Reckson New York Property Trust [$1 partly paid] Real Estate 0.65 0.6528-09-05 Giaconda Pharmaceuticals, Biotechnology & Life Sciences 0.50 0.5004-10-05 Alinta Infrastructure Holdings [$3.20 partly paid] Utilities 2.00 2.3504-10-05 Auzex Resources Materials 0.50 0.7211-10-05 Australian Oil Company Energy 0.20 0.1511-10-05 Vital Metals Materials 0.20 0.1913-10-05 Buka Gold Materials 0.50 0.4917-10-05 Quickstep Holdings Capital Goods 0.25 0.2320-10-05 Hodges Resources Materials 0.20 0.2320-10-05 Incremental Petroleum Energy 1.00 0.9820-10-05 Resource Finance and Investments Consumer Services 0.20 0.2025-10-05 Eldore Mining Corporation Materials 0.25 0.2925-10-05 Uranex Energy 0.20 0.2526-10-05 CathRx Health Care Equipment & Services 1.00 1.3526-10-05 Maximus Resources Materials 0.20 0.1528-10-05 Babcock & Brown Wind Partners Group Utilities 1.40 1.6828-10-05 Segue Resources Materials 0.50 0.6031-10-05 Red Fork Energy Limited Energy 0.20 0.2602-11-05 Fone Zone Group Retailing 1.00 1.0603-11-05 Automotive Holdings Group Retailing 1.00 1.15



Premium Absolute(closing trade performance Amount raised Underwriting fee/ Other fees/ Total fees/

on listing date) at 30 June (without calls) Dividend yield amount sought amount sought amount sought% % $m % % % %

2 (22) 80.5 7.60 3.56 3.10 6.6619 (3) 300.2 N/A N/A 5.34 5.343 (10) 45.0 N/A 4.00 19.33 23.33

79 293 0.6 N/A N/A 22.68 22.6824 (30) 9.0 10.00 4.00 4.33 8.333 0 29.0 8.75 N/A 16.57 16.57

58 (40) 3.8 N/A N/A 7.89 7.895 (23) 3.2 N/A N/A 11.40 11.40

25 78 13.5 N/A N/A 13.83 13.83(15) 10 5.2 N/A N/A 10.00 10.00

4 (23) 113.1 9.30 3.70 6.64 10.346 17 128.0 9.00 1.50 8.99 10.495 (18) 30.0 N/A N/A 6.80 6.80

10 124 9.0 N/A 5.00 6.11 11.11(4) 12 6.0 N/A 4.00 8.67 12.670 (20) 1.5 N/A N/A 14.27 14.272 (30) 157.5 9.25 2.50 1.31 3.81

43 168 6.0 N/A N/A 12.92 12.9210 (15) 4.8 N/A 3.28 9.27 12.55

(15) (23) 5.0 N/A N/A 10.20 10.20(5) (35) 3.6 N/A N/A 10.90 10.9010 235 2.5 N/A N/A 13.71 13.7135 35 3.0 N/A N/A 8.67 8.67

112 624 3.0 N/A N/A 10.00 10.0090 98 3.0 N/A N/A 8.00 8.007 (75) 9.0 N/A 1.00 10.11 11.116 (12) 126.0 9.50 5.00 2.02 7.02

43 355 3.0 N/A N/A 22.69 22.6936 (56) 14.0 N/A N/A 10.50 10.50(2) (10) 160.0 5.65 3.88 1.75 5.637 (30) 4.1 N/A 0.87 9.37 10.24

40 60 3.0 N/A N/A 8.07 8.0720 210 3.0 N/A N/A 5.80 5.8080 (20) 5.0 N/A N/A 10.18 10.185 55 40.0 5.00 3.50 5.25 8.75

(5) (20) 6.0 N/A N/A 8.67 8.67

3 59 30.0 N/A 5.50 0.60 6.100 12 171.0 9.23 3.00 4.07 7.070 (20) 6.0 N/A 4.00 9.33 13.33

18 (15) 463.0 6.75 3.41 0.59 4.0044 164 5.0 N/A N/A 9.80 9.80

(25) (63) 6.0 N/A N/A 10.00 10.00(5) 0 8.0 N/A N/A 8.21 8.21(2) (66) 12.0 N/A 5.00 3.71 8.71(8) 4 6.0 N/A N/A 8.07 8.0715 40 2.7 N/A N/A 9.37 9.37(2) 45 61.0 N/A 6.00 1.81 7.810 0 3.5 N/A N/A 7.40 7.40

16 (56) 4.0 N/A N/A 14.37 14.3725 90 6.6 N/A N/A 8.55 8.5535 60 14.0 N/A 5.00 3.64 8.64

(25) (38) 7.0 N/A N/A 12.17 12.1720 8 396.0 8.00 1.89 9.14 11.0320 50 1.0 N/A N/A 13.50 13.5028 50 5.7 N/A N/A 8.20 8.206 30 62.0 6.00 2.75 2.90 5.65

15 105 45.7 8.50 4.00 8.04 12.04



09-11-05 AtCor Medical Holdings Health Care Equipment & Services 0.50 0.7009-11-05 Regional Express Holdings Transportation 1.00 0.9810-11-05 Little World Beverages Food Beverage & Tobacco 1.00 1.1516-11-05 Austbrokers Holdings Insurance 2.00 2.2117-11-05 Aurora Sandringham Dividend Income Trust Diversified Financials 10.00 9.9017-11-05 Macquarie Media Group [$4.75 partly paid] Media 2.75 2.7017-11-05 QM Technologies Commercial Services & Supplies 2.00 2.1417-11-05 Washington Resources Materials 0.20 0.2222-11-05 Uranium Exploration Australia Energy 0.20 0.1625-11-05 Talisman Mining Materials 0.20 0.2030-11-05 Odyssey Energy Energy 0.20 0.2530-11-05 Safety Medical Products Health Care Equipment & Services 0.20 0.1806-12-05 Dynasty Metals Australia Materials 0.20 0.1706-12-05 HFA Accelerator Plus Diversified Financials 1.10 1.1609-12-05 Globe Uranium Energy 0.20 0.2209-12-05 Medical Therapies Pharmaceuticals, Biotechnology & Life Sciences 0.20 0.2009-12-05 Rubicon Europe Trust Group Real Estate 1.00 1.0212-12-05 Clean Seas Tuna Food Beverage & Tobacco 0.50 0.5212-12-05 RUN Corp Real Estate 1.00 0.9814-12-05 Australian Biodiesel Group Energy 1.00 1.0114-12-05 BrainZ Instruments Health Care Equipment & Services 0.50 0.5414-12-05 GLG Corp Consumer Durables & Apparel 1.00 1.0014-12-05 National Leisure & Gaming Consumer Services 0.50 0.4814-12-05 SP AusNet Utilities 1.38 1.3015-12-05 Saferoads Holdings Capital Goods 1.00 1.0515-12-05 Tutt Bryant Capital Goods 1.00 1.2516-12-05 Reverse Corp Telecommunication Services 1.70 1.8516-12-05 Spark Infrastructure Group [$1.80 partly paid] Utilities 1.26 1.1919-12-05 Cockatoo Coal Energy 0.20 0.2019-12-05 Goodman Fielder Food Beverage & Tobacco 2.00 2.0419-12-05 Valhalla Uranium Energy 0.40 0.5520-12-05 C@ Health Care Equipment & Services 0.20 0.1621-12-05 Eureka Mines Materials 0.20 0.2221-12-05 Portland Orthopaedics Health Care Equipment & Services 0.25 0.2623-12-05 Katana Capital Diversified Financials 1.00 1.0003-01-06 Oaks Hotels & Resorts Real Estate 1.00 1.3406-01-06 White Sands Petroleum Energy 0.20 0.2409-01-06 Azumah Resources Materials 0.20 0.2318-01-06 Australasia Gold Materials 0.20 0.2323-01-06 Capital Intelligence Consumer Services 0.20 0.2014-02-06 Red Hill Iron Materials 0.20 0.4815-02-06 VDM Group Capital Goods 1.00 1.6016-02-06 Austral Waste Group Commercial Services & Supplies 0.20 0.2007-03-06 Central Petroleum Energy 0.20 0.1708-03-06 Primary Resources Materials 0.20 0.2216-03-06 Cumminscorp Commercial Services & Supplies 0.20 0.1521-03-06 Cortona Resources Materials 0.20 0.2521-03-06 Geothermal Resources Utilities 0.25 0.2223-03-06 Richfield Investments Transportation 0.20 0.2223-03-06 Terrain Minerals Limited Materials 0.20 0.2324-03-06 Chalice Gold Mines Limited Materials 0.20 0.2324-03-06 Toro Energy Limited Energy 0.25 0.8130-03-06 Encounter Resources Limited Energy 0.20 0.3305-04-06 European Investors Global Property Trust Diversified Financials 1.00 1.0506-04-06 Alloy Resources Materials 0.20 0.2206-04-06 Royal Resources Materials 0.20 0.3207-04-06 ActivEX Materials 0.20 0.2207-04-06 BigAir Group Telecommunication Services 0.25 0.25


$ $ % %



40 (61) 15.0 N/A 5.00 2.67 7.67(3) (1) 35.0 N/A 2.00 5.71 7.7115 23 21.5 N/A N/A 5.12 5.1211 58 90.0 N/A 2.50 2.91 5.41(1) (4) 48.5 N/A N/A 1.94 1.94(2) 8 550.0 8.60 N/A 2.63 2.637 8 48.0 5.87 2.50 3.13 5.637 (35) 3.0 N/A N/A 7.13 7.13

(20) 33 6.0 N/A 3.33 5.33 8.670 (10) 3.0 N/A N/A 4.67 4.67

23 190 5.0 N/A N/A 8.77 8.77(10) 5 4.1 N/A N/A 18.50 18.50(13) 55 2.7 N/A N/A 5.56 5.56

5 (12) 120.0 N/A N/A 0.63 0.637 160 2.7 N/A N/A 11.17 11.17

(3) 43 3.0 N/A N/A 10.73 10.732 (4) 258.6 9.00 3.00 1.68 4.683 (13) 18.0 N/A 3.75 4.58 8.33

(2) (84) 25.0 N/A 3.50 11.30 14.801 15 20.0 N/A N/A 9.54 9.548 (16) 13.0 N/A N/A 9.23 9.230 2 15.6 N/A N/A 10.26 10.26

(4) (29) 30.0 N/A 3.25 3.72 6.97(6) (9) 1,415.0 7.20 N/A 3.46 3.465 35 11.5 6.00 4.50 2.31 6.81

25 89 25.9 5.50 3.50 6.16 9.669 53 77.9 6.30 N/A 0.79 0.79

(6) (10) 1,145.0 9.20 N/A 3.88 3.88(3) (23) 20.0 N/A N/A 5.50 5.502 7 2,649.0 5.90 N/A 3.81 3.81

38 170 8.0 N/A N/A 3.13 3.13(20) 0 2.5 N/A N/A 17.00 17.0010 5 2.2 N/A N/A 11.36 11.364 36 5.0 N/A N/A 14.22 14.220 (6) 21.2 N/A N/A 5.53 5.53

34 69 30.0 7.50 3.00 6.03 9.0320 (35) 10.0 N/A 4.00 3.74 7.7415 18 6.0 N/A 5.00 4.00 9.0015 (35) 3.0 N/A N/A 16.67 16.670 (53) 3.0 N/A N/A 3.33 3.33

140 350 4.0 N/A N/A 2.50 2.5060 91 8.2 N/A 4.00 5.51 9.510 (10) 2.9 N/A N/A 12.50 12.50

(15) (45) 10.6 N/A 1.90 6.00 7.907 (20) 3.5 N/A N/A 11.00 11.00

(25) (70) 15.0 N/A N/A 6.00 6.0025 20 3.0 N/A N/A 8.97 8.97

(12) (24) 4.8 N/A N/A 1.68 1.6810 (10) 1.2 N/A N/A 23.93 23.9315 (23) 5.0 N/A N/A 2.06 2.0615 (15) 7.5 N/A N/A 8.05 8.05

222 82 18.0 N/A 5.00 2.39 7.3965 25 5.0 N/A N/A 11.60 11.605 (1) 30.3 7.60 N/A 0.38 0.387 (8) 7.0 N/A 4.00 6.40 10.40

60 0 1.1 N/A N/A 11.86 11.8610 (30) 3.0 N/A N/A 14.40 14.400 (40) 7.5 N/A N/A 9.90 9.90

Premium Absolute(Closing trade performance Amount raised Underwriting fee/ Other fees/ Total fees/on listing date) at 30 June (without calls) Dividend yield amount sought amount sought amount sought

% % $m % % % %



07-04-06 Dyno Nobel Materials 2.37 2.6820-04-06 Fall River Resources Energy 0.20 0.1820-04-06 Intermet Resources Materials 0.20 0.2721-04-06 Pryme Oil & Gas Energy 0.20 0.2628-04-06 Amazing Loans Diversified Financials 2.50 2.5528-04-06 Eneabba Gas Utilities 0.25 0.2428-04-06 HFA Holdings Diversified Financials 1.10 1.4002-05-06 Castle Minerals Materials 0.25 0.3102-05-06 International Goldfields Materials 0.20 0.2304-05-06 Mission Biofuels Energy 1.00 1.3905-05-06 Incitive Pharmaceuticals, Biotechnology & Life Sciences 0.20 0.2409-05-06 Blue Chip Financial Solutions Limited Real Estate 0.74 0.7409-05-06 Geopacific Resources NL Materials 0.20 0.1910-05-06 Linc Energy Ltd Energy 0.25 0.2011-05-06 Echo Resources Limited Materials 0.25 0.2711-05-06 Praemium Limited Software & Services 0.40 0.4911-05-06 U3O8 Limited Energy 0.20 0.6812-05-06 Aditya Birla Minerals Limited Materials 1.95 3.1915-05-06 ING Real Estate Healthcare Fund Real Estate 1.00 1.0016-05-06 Global Masters Fund Limited Diversified Financials 1.00 1.0518-05-06 Cheviot Kirribilly Vineyard Property Group Real Estate 2.50 2.5018-05-06 My Net Fone Limited Telecommunication Services 0.20 0.2519-05-06 A Cap Resources Materials 0.20 0.3622-05-06 Burleson Energy Limited Energy 0.20 0.2023-05-06 Zedex Minerals Limited Materials 0.20 0.2529-05-06 MEC Resources Limited Energy 0.20 0.1529-05-06 Platina Resources Limited Materials 0.20 0.2030-05-06 Aura Energy Limited Energy 0.20 0.2002-06-06 Advance Energy Energy 0.25 0.2902-06-06 Magma Metals Materials 0.20 0.1802-06-06 Wotif.com Holdings Retailing 2.00 3.3205-06-06 Rey Resources Energy 0.25 0.1706-06-06 Eden Energy Energy 0.20 0.1806-06-06 Icon Resources Materials 0.20 0.2107-06-06 Copper Range Materials 0.20 0.3208-06-06 Sedgman Capital Goods 1.00 1.3009-06-06 Capitol Health Health Care Equipment & Services 0.20 0.2715-06-06 Ausenco Capital Goods 1.00 1.5515-06-06 DWS Advanced Business Solutions Software & Services 1.00 1.0119-06-06 Newera Uranium Energy 0.20 0.2319-06-06 Trafford Resources Materials 0.20 0.1820-06-06 The Gold Company Materials 0.20 0.2820-06-06 Panaegis Gold Mines Materials 0.20 0.1722-06-06 Retail Food Group Consumer Services 1.00 0.9227-06-06 Gladiator Resources Materials 0.20 0.1528-06-06 Bravura Solutions Limited Software & Services 1.12 1.2829-06-06 Royalco Resources Materials 0.50 0.5630-06-06 APA Financial Financial Services Software & Services 0.50 0.5530-06-06 Babcock and Brown Residential Land Real Estate 1.00 1.00


$ $ % %



13 4 1,075.0 N/A N/A 3.35 3.35(10) (28) 6.4 N/A N/A 8.32 8.3233 (30) 6.0 N/A N/A 15.13 15.1330 188 7.0 N/A N/A 6.93 6.932 0 1.3 N/A N/A 6.88 6.88

(4) (4) 8.3 N/A N/A 7.54 7.5427 54 90.0 4.10 2.50 4.72 7.2224 24 3.8 N/A N/A 5.95 5.9515 (10) 5.0 N/A N/A 9.50 9.5039 40 27.0 N/A N/A 7.99 7.9918 15 3.0 N/A N/A 14.23 14.230 (1) 20.0 N/A N/A 8.00 8.00

(8) (33) 2.4 N/A N/A 4.89 4.89(20) (30) 22.0 N/A N/A 6.82 6.82

8 (26) 6.0 N/A N/A 8.83 8.8323 50 18.0 N/A 4.25 2.64 6.89

240 50 5.0 N/A N/A 3.70 3.7064 37 299.0 2.70 3.25 0.66 3.910 13 31.5 8.40 N/A N/A N/A5 (4) 17.3 N/A N/A 3.75 3.750 (27) 0.8 10.00 N/A 2.82 2.82

23 (20) 2.5 N/A N/A 20.00 20.0080 30 5.0 N/A N/A 8.30 8.300 (18) 4.0 N/A N/A 9.30 9.30

25 25 5.0 N/A N/A 7.00 7.00(25) (25) 5.0 N/A N/A 17.25 17.25(3) (5) 6.2 N/A 3.00 4.56 7.560 (30) 5.0 N/A N/A 10.55 10.55

16 (14) 6.0 N/A N/A 10.28 10.28(10) (25) 6.0 N/A N/A 10.00 10.0066 65 172.0 4.50 N/A 4.19 4.19

(34) (48) 5.0 N/A N/A 7.96 7.96(10) (35) 8.4 N/A N/A 7.50 7.50

5 (10) 4.0 N/A N/A 10.95 10.9560 60 3.0 N/A N/A 12.73 12.7330 50 40.0 5.60 3.50 4.00 7.5035 33 1.8 N/A 5.00 4.39 9.3955 65 25.9 5.50 3.00 2.29 5.291 5 71.4 5.90 3.40 1.23 4.63

15 20 3.0 N/A N/A 9.03 9.03(10) (5) 4.0 N/A N/A 9.67 9.6740 30 4.0 N/A N/A 7.14 7.14

(15) (38) 7.0 N/A 5.50 4.50 10.00(8) (16) 36.5 6.25 3.50 2.25 5.75

(25) (33) 2.5 N/A N/A 14.00 14.0014 14 40.0 3.10 N/A 7.50 7.5012 12 12.0 N/A 4.00 4.04 8.0410 10 6.0 N/A 5.00 3.33 8.330 0 175.0 7.50 0.03 6.48 6.51

Premium Absolute(Closing trade performance Amount raised Underwriting fee/ Other fees/ Total fees/on listing date) at 30 June (without calls) Dividend yield amount sought amount sought amount sought

% % $m % % % %


Corporate FinanceJulian Vella Antony Cohen+61 3 9288 5019 +61 3 9288 [email protected] [email protected]

Jamie Green+61 2 9335 [email protected]

TaxPeter Poulos Peter Madden+61 3 9288 6576 +61 2 9335 [email protected] [email protected]

ContributorsAdrian Arundell M&A, Corporate FinanceGaurav Ahuja Capital Markets Advisory, Corporate FinanceNick Broome RAS, Audit and Risk Advisory ServicesAntony Cohen M&A, Corporate FinanceDiana D’Ambra Valuations, Corporate FinanceJamie Green M&A, Corporate FinanceBaoqin Guo Capital Markets Advisory, Corporate FinanceIan Knight M&A, Corporate FinanceMalcolm Kpedekpo Capital Markets Advisory, Corporate FinanceRachael Phelan RAS, Audit and Risk Advisory ServicesPeter Madden Corporate TaxPeter Poulos Corporate TaxMatthew Santoro Capital Markets Advisory, Corporate FinanceSymon Vegter M&A, Corporate Finance

Related KPMG publicationsThinking of an IPO? prepared by KPMG in Australia, kpmg.com.au/Services/Corporate Finance/Publications

AIFRS – A work in progress prepared by KPMG Australia,kpmg.com.au/Services/Audit/Issues & Insights

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CORPORATE FINANCE Survey of the Australian Capital Markets ... · experienced as a result of International Financial Reporting ... amounts raised across most capital raising types