Kina Securities will become one of the first dual-listed Papua New Guinea-Australian companies when it begins life on the ASX boards on Thursday morning.
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The Port Moresby-based company manages a range of financial products and has a market-leading position in the micro-lending space and superannuation. It is the largest licensed funds manager in the country with more than $2.3 billion under management.
However, the stock sparked conversation among Australian investors due to its relatively cheap starting price as well as its dependence on the Papua New Guinean economy and currency.
The 30 year old company has raised $97 million from its IPO, with the shares starting at $1. It has a 7.5 price-to-earnings ratio and its prospectus says it is aiming for an annualised 9.7 per cent dividend yield. It will have a market cap of $164 million.
Despite the risks, the IPO is oversubscribed. One investor, Bill Laister from Contango Asset Management, is optimistic about the company and its unusual exposure to the burgeoning middle class of Australia's rapidly growing neighbouring economies.
"We participated in the float because we liked the company, its valuation and the share price. It's very cheap, which compensates for increased risks, and the price and valuation will support the stock going forward," Mr Laister said.
Australian investors can gain exposure to Papua New Guinea through two of Australia largest banks, Westpac and ANZ, but Mr Laister said Kina's potential lay in its access to wider range of financial products and profits.
"This is the first listed opportunity to get exposure to banks involved at the micro-lending level, which we think has real potential," Mr Laister said.
The majority of Kina Securities's operating revenue comes from lending operations. Another quarter comes from foreign exchange and remittance activities and another quarter from deposits and funding.
A significant proportion of the funds raised from the IPO, just under $77 million, will go towards the acquisition of another Papua New Guinea financial company the Maybank Group and covering the costs of listing.
Another $22 million will go to the company's largest shareholder, Hong Kong based investment company Fu Shan, in a partial sell-down.
Kina Securities, which is chaired by former Papua New Guinea prime minister Sir Rabbie Namaliu, will appoint former Suncorp chief executive David Foster to its board.
The float is underwritten by Morgan Corporate. It will list on both the ASX and the Port Moresby exchange on Thursday morning.
