Peoplebank Chalks Up Health Premium

Article appeared in: Australian Financial Review
Author: Derek Parker
Date: 16th June 2005

Peoplebank, a recruiting company in the information technology and telecommunications sectors, made a healthy start to life on the Australian Stock Exchange yesterday, closing at a 20% premium to its issue price.

On a day when the market continued to march towards record territory, Peoplebank hit the boards at a 10¢ premium to its issue price of 50¢, and closed at 60¢.

However, with the size of the free float at about 23 million shares, or about 55% of the 41.26 million shares quoted, only 73,000 shares changed hands. Peoplebank directors Leon Lau and David Armstrong hold about 44% of the shares in the company. The shares are in escrow until at least December 31, 2005.

Peoplebank was established in 1990 to offer specialist contracting and recruitment services. It intends to use the capital it has raised to pay down $3 million in debt and position itself for future growth, including accessing future equity capital after its listing.

The climate for new IPOs such as Peoplebank may have been aided by the glut of money that has hit the market in the wake of the completion of a number of major takeovers such as BHP Billiton’s bid for WMC Resources.

But despite a favourable climate the standard of offerings has not been outstanding, according to Investors Mutual portfolio manager Monik Kotecha.

“People say there’s a lot of cash around, maybe that’s correct, but the general quality hasn’t been that great,” Mr Kotecha said.

Meanwhile, EIM Resources, an investment company that specialises in the resources sector, said it was aiming to list through a $20 million initial public offering that is not underwritten. It planned to issue up to 20 million shares at $1.00 each and would use the proceeds to buy a portfolio ASX.