Australia's SurfStitch debuts at small discount

SYDNEY, Australia - Australian online clothing retailer SurfStitch Group Ltd debuted at a small discount after the company formerly controlled by Billabong International Ltd raised A$83 million ($68.24 million) in an initial public offering.

The shares first traded at A$0.98 at 0100 GMT (08:00 p.m. EST) and drifted down to A$0.97, compared with their A$1.00 issue price, while the broader market fell 0.5 percent.

The solid if unspectacular listing performance gives Queensland-based SurfStitch a market capitalization of A$208 million, about three times what former owner Billabong sold it for five months earlier as part of a restructuring after years of losses.

It also justifies SurfStitch's decision to join the ranks of globally-focused Australian tech firms which have bypassed overseas technology markets like the NASDAQ in the hope of attracting support locally.

Australian listings have been especially popular in 2014, with the year already the country's biggest for IPO activity as company owners capitalize on what was until recently a relatively buoyant equity market fueled by record low interest rates.

The market capitalization values SurfStitch at a multiple of about one time its forecast 2015 revenue, a discount to similar online clothing retailers like U.K.-listed ASOS and Boohoo.Com which trade over two times forecast annual revenue.

But the post-IPO market capitalization is far higher than the roughly A$70 million the company was effectively worth when Billabong exited in August, highlighting the urgency of that sale.

SurfStitch's current owners, its founding directors and fund managers Perpetual Ltd, Paradice Investment Management and Ausbil Investment Management Ltd, all kept large stakes in the company after listing, a source working on the sale told Reuters.

A$1 = US$0,82/£0.52