Pop, Fizz… A Tale of Two Floats
Back in May, Australian personal injury law firm Slater & Gordon (ASX:SGH) captured attention as the first law firm to float on a public exchange. Listed at a dollar per share, S&G popped on day 1, up about 40% and since then has risen more than 80% above its listing price (A$1.80+ by the end of August).
This month, another Australian firm, Integrated Legal Holdings (ASX:IAW), also listed, no doubt hoping for similar results. But for reasons not yet clear, ILH has so far proved to be a fizzer. Despite being oversubscribed, ILH has suffered a steady slide, down from its original issue price of 50 cents, closing around 35 cents by the end of August (a fall of about 30%).
What’s the difference?
ILH did float on a jittery day for the Australian markets. But since that day the overall market index is up, and ILH is well and truly down.
ILH may be a little more confusing to investors, as a roll-up of three small law firms and an online legal service. These are hard to value alone, let alone bundled together, so investors may be discounting the business until they see some results. Investors may also think that a legal business should stick to what it does best, ie, legal work, rather than trying to build its own document assembly system (but we would say that, wouldn’t we).
For law firms wondering if the public markets are paved with gold, the evidence, so far, is mixed. But we can report that the Australian sky has not yet fallen down.