Australian internet domain name registry Melbourne IT Ltd staged a dramatic debut on the Australian Stock Exchange on Tuesday, with its A$2.20 IPO share price soaring as high as A$9.10 before closing at A$7.99.
By the end of trading 11.8 million shares, nearly 28% of the company’s freely tradable capital, had changed hands. The biggest winner was Melbourne University, which raised A$93.5m ($59.4m) from the sale while retaining 7.5 million shares now worth $59m ($37.5m). Its three-year investment outlay was less than $2m ($1.27m).
At its closing share price, MelbIT is capitalized at almost A$400m ($254m), which is roughly eight times the top price that Melbourne University staff believed the business would sell for just six months ago.
MelbIT chief executive Professor Peter Gerrand said that early this year, university staff had estimated the business to be worth between A$20m and A$50m. Broking houses had been unenthusiastic about the float and two major houses invited to bid for the underwriting did not bother to submit an offer.
The powerful buying interest in MelbIT shares caps off two years of strong internet-related listings, with more than 30 new internet stocks giving the sector a capitalization of more than $2.5bn ($1.59bn). Including the software and systems sector, Australia’s information-technology sector in general now consists of more than 50 companies, with a market capitalization of $16bn ($10bn).
MelbIT is the world’s second listed internet names registrar. The world’s largest, Network Solutions, is valued at $6.5bn. Another American registry, Register.com, is due to list soon.
Analysts said MelbIT’s popularity stems partly from a perception that it is a lower risk than many other internet companies, since companies licensed to register domain names have limited competition. There are only a handful of domain name registrars worldwide, which act as authorized agents of the Internet Corporation for Assigned Names and Numbers (ICANN).
