QR investors make a tidy profit

It’s reassuring news for the Queensland economy that QR National didn’t tank on its sharemarket debut yesterday.  As reported in the Sydney Morning Herald (QRN float defies doubters by not sinking):

Retail investors who paid $2.45 a share made a paper profit of 17 cents on each share within 15 minutes of listing, while institutional investors made 7 cents, putting to rest fears that the stock would tank on the first day of listing.

The shares rose even higher to $2.68, before closing at $2.65, up 10 cents or 3.9 per cent for the day. Turnover topped $1.2 billion, with 476.3 million shares changing hands.

This doesn’t mean the Queensland Government gets any extra cash out of the float – it’s the retail and institutional investors who are profiting from the trading – but it will be of some relief to the Government, as it affects the value of the 34% of the stock it holds on its balance sheet.  It also makes it less likely the float will be seen as a complete failure:

The Bligh Government, which has 33.7 per cent of the stock, will be hoping like hell that the stock stays around these prices for the next 30 days so that it doesn’t need to trigger a so-called greenshoe option to stabilise the share price.

In the QR float, the government included the greenshoe option, which allows the float’s promoters to go into the market and trade as much as 6 per cent of the stock for 30 days if it looks like it might fall below the issue price.

Of course, the market can be volatile and fickle.  It’s going to be a nervous 30 days for the Premier and Treasurer as they wait for the greenshoe clause to expire.

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