SYDNEY (XFN-ASIA) - Unexpected enthusiasm for shares in Telstra Corp Ltd nearly doubled the value of an expanded government float to 15.5 bln aud, final figures showed Sunday.
Finance Minister Nick Minchin announced that retail investors would pay a total of 3.60 aud a share and institutional investors 3.70 aud for 4.25 bln shares -- up from the 2.15 bln shares originally on offer.
'The level of interest from investors, both retail and institutional, was much higher than expected, making T3 the second biggest share offering in Australian history,' Minchin said.
The partial float of the government's remaining 51.8 pct stake in the troubled telco is known as T3 because it is the third tranche offered after T1 in 1997 and T2 in 1999, which brought in 16 bln aud.
Despite having to ditch plans to offer the entire government stake because of a plunging share price, the latest sale finally realizes Prime Minister John Howard's desire to end government ownership of the company.
The float got off to a rocky start against the background of a public row between the government and Telstra's American chief executive Sol Trujillo, who complained of restrictive regulations and interference in the running of the company.
The offer was also expected to meet resistance from the 'mum and dad' investors who lost heavily after paying 7.40 aud a share in the T2 sale and watching the price plunge by more than half.
But they were offered a range of sweeteners including a discount and a projected 14 pct yield to June next year, and snapped up the lion's share of the stock on offer.
Minchin said 95 pct of the retail applications would be satisfied, with small investors taking 60 pct of the shares, domestic institutions 28 pct and international institutions 12 pct.
'In order to satisfy the much higher than expected entitlement demand from existing shareholders, the base offer size has been increased, in accordance with the prospectus, to 3.69 bln shares,' Minchin said.
'In addition, as set out in the prospectus, a further 554 mln shares were made available to satisfy other demand in the institutional offer, bringing the total institutional offer size to 1.7 bln shares.'
Minchin said the remainder of the government's stake, 17 pct, would be placed in the Future Fund, established to cover public service pension payments, where it will be held for at least two years.
The final investment price of 3.60 aud for retail investors was determined after an institutional bookbuild which priced a second instalment for the shares at 1.60 each.
The securities will begin trading as instalment receipts on the Australian Stock Exchange today.
Telstra shares closed at 3.75 aud on Friday.
Terry Campbell, chairman of Goldman Sachs JBWere, one of three investment banks that managed the T3 sale, said he expects Telstra shares to trade at a slight discount.
And Argo Investments managing director Rob Patterson said that demand for Telstra shares might be close to exhausted by the expanded float.
(1 usd = 1.30 aud)
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