Nine Entertainment shares are tipped to make a successful debut on the ASX on Friday. Source: AAP
NINE Entertainment shares have ended their first day's trading below their issue price, taking some of the fizz out of the champagne that flowed as the TV network returned to being a publicly owned company.
Just after current affairs star Liz Hayes rang the bell at the Australian Securities Exchange building in Sydney, Nine Entertainment shares opened at $2.02, below their $2.05 issue price.
The stock traded as high as $2.07 after its midday open but ended down seven cents, or 3.4 per cent, at $1.98.
Chief executive David Gyngell made no comment on the pricing as he welcomed the company's new shareholders with the message that he "looked forward to the ups and downs" and would not sugar coat the realities of doing business.
"That's the way we run our business at Channel Nine - often wrong but never in doubt," Mr Gyngell said, to laughter from the crowd of staff and investors.
"You'll never hear us sugar coat it."
Mr Gyngell described the float process as "satisfying", saying in a statement that the share offer had been oversubscribed.
"We welcome both domestic and international investors and look forward to their long term investment in our business," he said.
Nine's float values the company at $1.93 billion and has raised $636 million, with $395 million flowing to the company's private owners including two US hedge funds that retain stakes.
A further $199 million goes to paying down debt while the company will receive $50 million in cash.
Mr Gyngell will be paid $2 million a year and received about 4.5 million shares under the terms of the float, worth $9.3 million at the issue price.
He also received a cash bonus of $2.5 million for taking the company to listing and an additional $4.5 million worth of performance rights.
Nine Entertainment shares were at $2 at 1444 AEDT, down five cents on heavy volume with 40 million shares traded.
BBY analyst Mark McDonnell said the first few hours of trading should not be seen as indicative of where the share price might go.
The shares came on at the low end of the $2.05-$2.35 range indicated during the offer and were "fairly priced", Mr McDonnell said.
The challenge for Nine now will be to achieve its 38.4 per cent ad revenue market share goals against a strengthened Ten Network.
Ten has billionaire shareholders Lachlan Murdoch, James Packer and Bruce Gordon backing a $200 million loan for the network and has secured rights to the Twenty20 cricket.
"Nine has a fantastic franchise in cricket through the summer and Ten is going to nibble away at that," Mr McDonnell said.
Mr McDonnell said Seven West Media remained his favoured free-to-air TV stock at present, partly because it had been sold down recently to accommodate the arrival of Nine.
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