Internet Floats Hit Brick Wall

[Sydney, AUSTRALIA] The number of dot com companies floating on the ASX will almost halve this financial year, according to consultancy firm KPMG's 1999-2000 capital markets survey.

The survey claims that 1999 to 2000 will be remembered as the year of the dot com floats, with 54 Internet-based businesses listing on the sharemarket and raising a total of $900 milion, up on $250 million the previous year. This year, however, will see all that change, with only 30 floats expected for the 2000-2001 financial year. These will raise approximately $500 million, according to the survey.

"To list successfully, dot com companies will need to demonstrate they have a sound business model and can actually make money in the near future," said national head of KPMG Finance, Julian Vella. Vella said investors were burned by the Internet boom of the previous year.

"The share prices of two thirds of the 54 Internet-based businesses to float last year were trading below their issue price at 30 June, 2000. In fact, seven of the worst ten price performers were dot coms. The worst performing stocks were 131shop.com.au and eisa, which were trading at discounts of more than 80 percent to their issue price at 30 June."