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Thursday, 2 June 1994
Page: 1203


Senator COULTER —I wished to ask this question of Senator Gareth Evans, the Leader of the Government in the Senate, but he has ducked and directed it to Senator Cook, the Minister representing the Minister for Finance. I refer the minister to the float of CSL shares which closed on Monday and was oversubscribed. Firstly, why at the last minute did the government increase the proportion of shares reserved for large financial institutions, including overseas buyers, from 35 per cent to 37 per cent? Secondly, why at the last minute did it also reduce the price from $2.40 to $2.30 per share? Thirdly, bearing in mind that this float was oversubscribed—and I stress that fact—and that there was no shortage of buyers, why did the government deny the Australian taxpayer some $13 million through this reduction of the sale price? Why did it ensure that some of the benefit of this reduced price accrued to overseas interests?


Senator COOK —I should first of all say that Senator Gareth Evans did not duck this. The question is an appropriate one to be answered by the Minister representing the Minister for Finance, and the Minister for Finance has provided me, thankfully I might say, with an answer. I will take in order each of the three questions Senator Coulter asked me.

  Firstly, the prospectus makes clear that the government intended to provide 35 per cent to bidders in the bookbuild process, of which a maximum of 20 per cent was available to foreign institutions. No individual purchaser was entitled to receive more than five per cent of the company. In the event, slightly more than 35 per cent was allocated to bidders who participated in the bookbuild process. Shares allocated to foreign institutions aggregated it to the 20 per cent cap that had previously been foreshadowed.

  Other bidders in the bookbuild process, which included domestic institutions and members of the Australian Stock Exchange bidding on behalf of their clients, received the remainder. This reflected the strength of bidding in the bookbuild and reallocated stock away from a few substantial subscribers to the public float towards domestic individuals and entities which had bid in the bookbuild. Some 90 per cent of the subscribers of the retail offer received the amount they had bid for. All up, retail investors were allocated about 70 per cent of the total stocks on offer.

  Turning to the second question, the government called for bids for the bookbuild process in the range of $2 to $2.40. Bids were made by those who participated at a number of points within that range. Having regard to the demand expressed at each pricing point, the government decided to establish a final price of $2.30. This was a price at which the government's sale objectives were met, including to achieve a dispersed ownership, with no more that 20 per cent held overseas and with good prospects that there would be an orderly aftermarket.

  With so many smaller investors in the float, the need to establish an orderly aftermarket was viewed with particular concern by the government. I note that CSL shares are now trading at a small premium, though less than typically occurs in respect of a more traditional fixed price approach. Just before the start of question time, CSL shares were trading at just over $2.40, suggesting that the price struck in the float was about right.

  In answer to the third question, I have nothing to add in view of my two foregoing answers.