On Friday Fairfax announced plans to sell via an Initial Public Offering (on the NZX) between 30 to 35% of Trade Me – New Zealands largest online auctions and classifieds business. Fairfax is yet to indicate the proposed time for the float but said the funds are to be used to repay debt and increase dividends.
Greg Hywood, CEO and Managing Director of Fairfax said:
The decision to pursue the IPO of Trade Me is a further step in reshaping the Fairfax portfolio and adopting a more flexible corporate structure to maximise shareholder value. Importantly, Fairfax will continue to benefit from the strong growth profile of Trade Me through a shareholding of at least 65%.
Former Fairfax chief David Kirk, who made the decision to buy the auction site in 2006 for some $700 million, will be brought back in as non-executive chairman of Trade Me.
There’s no doubt Trade Me is an excellent company as it has over 2.7 million registered traders and is said to contribute to around 17% of Fairfax’s online earnings. However, many spectators believe Fairfax paid too much for Trade Me so a successful IPO will clarify whether their investment was a success.
I don’t see this IPO having a direct affect on the Australian real estate industry but it should be positive for the New Zealand market as now buyers, sellers and agents can become owners in the portal they all use and enjoy.