Domain Holdings, Fairfax Media’s float of its online property classified business, was admitted to the official List of ASX today.
And Fairfax Media shares dropped by 31% to $0.73.
But Domain’s shares closed at $3.69, ahead of most estimates of fair value. The 574,870,366 shares in Domain opened for trading on a deferred settlement basis. The first day of formal trading is Thursday next week.
This gives domain a market capitalisation of about $2.12 billion. Fairfax itself is around $1.7 billion.
Fairfax shareholders got one Domain share for every ten Fairfax shares. No capital was raised and Fairfax, the publisher of The Age, the Sydney Morning Herald and the Australian Financial Review, has retained 60% of the new company.
Domain has grown revenue at a 28% compound annual growth rate over the past three years. In 2017, it delivered revenue of $320 million.
Fairfax Media in August reported a net profit of $83.9 million for the 2017 financial year, a turnaround from last year’s $772.6 million loss when the company wrote down the value of its newspaper mastheads by $989 million.
(Disclosure: Allure Media, the publisher of Business Insider, is 100% owned by Fairfax Media.)