SYDNEY—Department store Myer Holdings Ltd shares has been caught in the whirlwind of the market downdraught after listing on the Australian Securities Exchange (ASX), analysts say.
In the biggest float since the onset of the global financial crisis, the retailer opened at $3.88 on the ASX, 5.4 per cent lower than its issue price $4.10 at 1200 AEDT.
Its shares fell further to $3.86 by 1300 AEDT as the benchmark S&P/ASX200 index dropped 99.8 points, or 2.15 per cent, to 4543.4.
Austock Securities senior client adviser and strategist Michael Heffernan said the company could not have picked a much worse day to listed.
"They're caught up in the whirlwind of the downdraught and on a negative day you're not going to get any premium for a new float " Mr Heffernan said.
"It's a fair, average quality stock - I don't think it was a super bargain but it's going to surprise a lot of people.
"With the economy picking up I think retailers are going to do quite well."
FW Holst retail analyst David Spry said that with tomorrow's Melbourne Cup public holiday and the prospect of an interest rate rise, it might take some time before Myer's price establishes itself.
"It would be very hard for Myer to list above $4.10 today, [the open price] is where I was expecting to be," Mr Spry said.
"It's not too bad around this price, I don't think it's grossly expensive.
"Their balance sheet is reasonably strong, the yield is quiet nice and looks to be reasonable sustainable."
Myer announced on Thursday that is initial public offer had been successfully completed at $4.10 a share, the lower end of the indicative price range of $3.90 to $4.90.
Myer said it would have about 581 million shares on issue, a market capitalisation of about $2.4 billion and an enterprise value of $2.8 billion.
The US-based owners, private equity groups TPG and Blum Capital, decided to sell all of their shares "to satisfy some of the excess demand at the final price of $4.10".
Some analysts have said the float was over-priced and criticised the private equity owners for being opportunistic about the timing.
The share price of rival department store David Jones Ltd declined 12 cents, or 2.24 per cent, to $5.24.
