28/07/2016: Should you buy the Propertylink IPO?

28/07/2016: Should you buy the Propertylink IPO?

Scott Schuberg:

Keri and Peter from New South Wales both have a question on Property link IPO. They've got an offer to take up shares.


Shannon Rivkin:

A couple of mixed results on some of the IPOs recently, so I'm not going to necessarily say, "Do or don't," because of the current IPO market. There's demand for good ones, and some of the bad ones have been really, really hit hard. Property Link looks a high-quality business and I think demand will probably be strong. If I have any real concern, and it's certainly not a big one, is this is ... Basically what it is, is a property trust stapled together with a management business. This is a little bit of an old-fashioned style of business. You used to see all of these properties funds and infrastructure funds like Sydney airports all internally managed once upon a time. With the GFC and all that sort of stuff, that trend is changing now to usually externally managed.

The reason Property Link I think wished to do it is because it's such a high growing part of their business that they do want to include it. The value of the management business is about $200 million they say and the property fund about $700 million. It's significant. I think if they can grow it aggressively, there's a good reason to include it, but there is always issues of conflicts and all that stuff and different growth outlooks. That's my one concern, which may suggest it. It may not perform as well as maybe some of the other property trusts, but it's a high-quality name. They've got a good track record of performance. The management business, as I said, looks exciting. I can't see why you'd be nervous about taking shares. Whether there's a huge stag on day one, hard to say. It looks like it could be good over the long term.



This video contains general advice only

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