Plumbing supplies business Reliance Worldwide has capped the largest market listing of 2016 with a roaring ASX debut as investors bought into the company’s growth plans in North America and Europe.
Reliance shares surged to $2.95 on Friday, a gain of 18 per cent on their $2.50 issue price in the IPO which raised more than $900 million.
The company’s market value has gone past $1.5 billion, well over the $1.3 billion indicated in the company’s prospectus.
Morgans Brisbane client adviser Bill Chatterton, whose firm acted as co-lead managers on the float, said the result was “fabulous” for Reliance and its directors.
“People are looking for good sustainable businesses which, in those cases, are also growing, so I think it ticks a lot of those boxes for fund managers and individual investors,” Mr Chatteron said.
“Everybody would be very happy, I think.”
More than 28 million shares were traded in the first five minutes of the company’s market debut, and 117 million shares had swapped hands by the close of trade.
The Melbourne-based Munz family, which has presided over Reliance for 30 years, retained a 30 per cent stake in the company.
That holding gained almost $71 million in value on Friday and is now worth around $465 million.
Wealth Within chief analyst Dale Gillham counselled against short term investment in the stock, however, predicting Reliance shares would be cheaper in 12 months’ time.
Mr Gillham said the company was well run but its exposure to moves in the Australian dollar, lack of shareholder diversity and cooling local housing market all concerned him.
“While it’s started off nicely, I don’t think it’s necessarily going to be a great stock in the next 12 months,” Mr Gillham said.
“Short term, I don’t think it’s going to be a fantastic share, but long term, I think it’s going to be good.”
Pro forma prospectus figures show the company generated net sales of $452 million in 2014/15, which are projected to increase to $535 million in 2015/16.
Heath Sharp, who has been with Reliance since 1990 and was present at ASX headquarters for the float, will serve as chief executive.