Bad idea of the month

Can you imagine anyone sitting at the ECM desk of a North American investment bank this morning pitching the Head of their Institutional Sales desk on an IPO for a wholesale lending shop that serves the housing industry? After the profanities wore off, and the phone was slammed into its cradle, you’d be wondering if your bonus would be impacted if word got out that you’d finally fallen from favour.

Well, in Australia two weeks ago, UBS did just that.

Stock is down more than half in the couple of weeks post IPO. The firm originally sought to sell itself to LBO firms for A$1 billion, but everyone bailed from the process (except KKR) and RAMS went public instead with a A$695 million raise:

Luckily for the mum-and-dad investors there was no offer to the general public.

Instead there were three tranches: a priority offer to employees, franchisees and investors who were invited by the directors to participate; a broker firm offer, the only portion in which retail investors got a look in; and an institutional offer.

The RAMS shares were offered by J Kinghorn and Co Pty, as trustee for the Kinghorn family trust, Strategic Marketing Services and Greg Jones. The prospectus was dated June 25.

MRM