Futures Exchange Sets Date For Own Listing

Sydney Morning Herald

Saturday March 23, 2002

Jan Eakin

The Sydney Futures Exchange plans to list on the Australian Stock Exchange next month, more than two years after the country's No1 derivatives market began the complex process of demutualisation.

The switch from the Austock exempt market to the main sharemarket is to occur on April 16.

No new shares will be issued and no capital will be raised, but almost 110 million shares now held by the exchange's 366 former members should become more freely available to retail shareholders.

The stock will begin trading at the same level as the closing price on Austock the day before.

While liquidity in the stock is expected to improve as institutions take profits following the market switch, many are expected to maintain their tight grip on the derivatives exchange.

The market's big brokers are believed to hold more than 86 per cent of the equity.

After listing at $1.32 a share 18 months ago, the tightly held stock has almost trebled.

Since the start of the year it has risen 80c to $3.90 as investors price in the high-profile move to the ASX.

SFE chairman Rick Holliday-Smith expects the move to increase the group's profile among the investment community.

``This move basically means anything we want to do, we can do easier," Mr Holliday-Smith said. ``We will have a currency in our shares which is a much more powerful currency. Shareholders will have more value.

``Part of what we're doing here is this delicate balance between trying to maximise value for our shareholders, provide really powerful value to the market and be a better place to employ people. The organisation feels better."

Capped at around $500 million double the takeover price offered by Computershare and the ASX three years ago the exchange's share price is expected to benefit from index tracking fund managers' taking account of the stock's weighting as it moves into the main sharemarket indices.

The shareholder ownership limit has been increased to 15 per cent, in line with the ASX, which recently saw its ownership limit increased. UBS Warburg, adviser to the listing on ASX, is the biggest shareholder, with a 7.8 per cent stake.

The SFE won't speculate on earnings forecasts because of the market's volatile nature. But it has reiterated its plans to provide 15 per cent return on equity.

For the year to December 31, 2001, the SFE reported a net profit after tax of $21.4 million, compared with $4.5 million the year before. A fully franked final dividend of 7.7c a share was declared, taking total dividends for the year to 12c a share. Return on equity was 14.5 per cent.