You can tell the market has changed, and for the better, when you see the long list of IPOs (initial public offerings) that will be listed soon, even as early as Christmas. Companies that had plans to list previously put it off because the general mood over the past few years was depressed, but many now see the opportunity to ride the market upturn.
Here are three IPOs that may not be the biggest, yet could net you a strong positive gain after listing as well as for the longer term.
National Storage Property Trust: A leader in the self-storage business, National Storage is a chain of 62 self-storage centres across Australia with a growing market. The National Storage Property Trust, an unlisted trust under APN Property Group (ASX: APD), has investments in 37 storage centres leased to National Storage.
National Storage is planning to take over the property trust, estimated to have a value of $206 million, and list the fund. Self-storage is in demand because as people live in units more and more, they still need to store personal items.
Chain business growth is a great way for investors to ride a wave of expansion across the country with a successful business. National Storage is already in Brisbane, Sydney, Melbourne, Perth and Adelaide, and competitors are mostly private, single centre owners, so growth by acquisitions can be just lucrative as greenfield growth.
BIS Industries: This mining site trucking company transports ore from the mines of major mining companies like Rio Tinto (ASX: RIO), Fortescue Metals Group (ASX: FMG) and Newcrest Mining (ASX: NCM) to ports for export shipment. Operating in all the resource-rich regions across Australia, it is exposed to low-cost producers that have staying power when commodity prices go down, and will have larger ore volumes when prices go up.
Mining services companies may be down in general, but the mining companies are reporting higher shipping volumes, so transport services will get a lift from that. Expectations are that funds from the IPO will partly be used to reduce debt, possibly cutting it in half, making the balance sheet much stronger. The company's earnings are more than $200 million each year.
Pact Group: One of country's largest packaging companies, and headed by Raphael Geminder, the son-in-law of Richard Pratt, the late packaging mogul, the IPO puts the estimated value of the company at around $2 billion.
Annual revenues are around $1 billion domestically and $300 million internationally, with domestic earnings about $200 million. It specialises in plastic and steel packaging for food, beverage, household, pharmaceutical, personal care and industrial markets. These products will expand as the economy grows.
Funds from the IPO are earmarked to pay down debt, about $900 million currently, and prepare for future Asian expansion.
Foolish takeaway
The S&P ASX 100 Index (ASX: XTO) has gone up by 22.6% over the past 12 months, and with the change in investing climate, IPOs are attracting attention, but you, the investor, have to sift through them, looking for the ones that have reasonable opening valuations, and can grow further in a stronger economy.
