Thursday 7 October 2010

Stagging QR National float

I was wondering why QR National began a TV advertising blitz last month - lots of long, long goods trains shipping mountains of coal around the place. All became clear why the share float/privatisation was announced - the Queensland government is selling off this public asset.

The prospectus won't be issued until next weekend, but from the amount of interest and pre-registration for share allocations it appears that the float will be a "success". And, as it is the Queensland government selling the shares, with Queensland residents getting a higher guaranteed allotment of shares than other Australian residents, I expect the issue price will be set slightly low for political reasons (don't sell voters shares that immediately drop in price!). So, I've pre-registered for a prospectus and guaranteed allotment, although if there is too much interest there is likely to be a scale-back, which reduces the scope for significant stag profits. Once the prospectus is released I'll look into details such as the loyalty bonus and maximum issue price and make a final decision on whether or not to invest in QR National.

With the resources boom likely to continue for a decade or more, a freight rail investment may be worth holding long term - especially if the privatised company makes significant cost savings post-float.

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