PNG’s Kina Securities jumps almost a third on ASX debut

Former Suncorp Bank chief executive David Foster joined Kina Securities’ board in June. Photo: Glenn HuntSyd Yates OBE says a 30 per cent jump on debut of Kina Securities shares was better than his most optimistic expectations, but now the non-bank lender must focus on bedding down a recent acquisition.
Shanghai night field

The chief executive of the Papua New Guinea-based financial company said the debut could have come under pressure, given the company’s $97 million raising was being spruiked to investors at the height of the Greek debt crisis.

“We were heavily oversubscribed, so we thought it would be a bit positive, but it definitely exceeded our expectations,” Mr Yates told Fairfax Media. “When we started the roadshow, there was a perception about PNG that wasn’t helpful, and the timing wasn’t good as the Greece crisis was reaching a head.”

The Port Moresby-based company offers a range of financial products and has a market-leading position in the micro-lending space and superannuation. It is the largest licensed funds manager in the country, with more than $2.5 billion under management.

Shares in the company, which began trading on both the Australian bourse and the Port Moresby Stock Exchange, closed at $1.30 a share, 30¢ higher than its $1 offer price. The company’s market value was $212.9 million at the close of trade.

​Bill Laister​ from Contango Asset Management, which bought into the float, told Fairfax Media on Wednesday that he was optimistic about the company and its unusual exposure to the burgeoning middle class in one of Australia’s rapidly growing neighbouring economies.

“It’s very cheap, which compensates for increased risks, and the price and valuation will support the stock going forward,” Mr Laister said.

“This is the first listed opportunity to get exposure to banks involved at the micro-lending level, which we think has real potential.”

About $77 million from the capital raising will go towards the acquisition of another Papua New Guinea financial company, the Maybank Group, and covering the costs of listing.

“The most important thing for us is integrating the acquisition as efficiently as possible,” Mr Yates said. “The Maybank purchase completes on the last day of August and we’re well on track for that.”

The share price rise on Thursday would have been watched closely by the 31 institutional investors, including AMP, that bought in.

The stock had caused concern among Australian investors due to its relatively cheap starting price as well as its dependence on the PNG economy and currency.

The majority of Kina Securities’ operating revenue comes from lending operations. A quarter comes from foreign exchange and remittance activities, and another quarter from deposits and funding.

About $22 million from the raising will go to the company’s largest shareholder, Hong Kong-based investment company Fu Shan, in a partial sell-down.

Kina Securities is chaired by former PNG prime minister Sir Rabbie Namaliu​. Former Suncorp chief executive David Foster joined its board in June.

Comments are closed.

Post Navigation