Fund managers shunned the offer over the timing of the decision to float the company.
Reuters reports that Coronado Global Resources, Australia's largest coal mining initial public offering (IPO) since 2012, fell by 8.5% below its float price on the first day of trading.
The company's shares debuted $2.69 (A$3.8), 5% lower than the issue price of $2.83 (A$4). Australian fund managers rejected the offering and said that the firm's private owner, The Energy & Minerals Group (EMG), was selling when coking coal prices were primed to fall on declining demand from China.
Coronado mainly produces coking coal used in steel-making, with an annual output of 8.2 million tonnes from three US mines and 8.5 million tonnes from the Curragh mine in Australia, which it bought from Wesfarmers Ltd for $495.96m (A$700m) last December.
Atlas Funds Management CIO Hugh Dive added that another factor that put him off was that Coronado had bought the Curragh mine on an earnings multiple of 1.5, yet was floating the same asset, which makes up about half the company’s valuation, on a multiple of 4 to 4.5.
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