BHP Billiton spin-off South32 has become Australia’s fourth largest miner after making a $10.9 billion debut on the stock market.
South32 listed on the ASX at $2.13 per share at noon, but lost ground in afternoon trade to close at $2.05.
With a market capitalisation of almost $11 billion, it is the fourth largest miner listed in Australia, behind BHP, Rio Tinto and gold miner Newcrest.
But the listing share price is close to the bottom of the $2 to $3.50 range tipped by analysts.
“It was certainly at the lower end of the valuation range but it was a very wide range,” CMC Markets chief market strategist Michael McCarthy said.
BHP shares dropped $2.36, or 7.3 per cent, to $30.13.
South32 houses a string of formerly BHP-owned assets covering out of favour sectors like aluminium, nickel, silver and coal, and the demerger is designed to allow the mining giant to focus on its core commodities like iron ore and petroleum.
Mr McCarthy said the company was unlikely to be a runaway success in the short term.
“Given the mix of commodities in the South32 vehicle we’re not expecting it to catch fire anytime soon,” he said.
“At the same time it’s been done at a time when valuations in these industries are quite low so it should hold the value in its share price quite well.”
But the company has relatively low debt levels, which may make it a possible takeover target for other mining giants like Glencore Xstrata.
South32 chief executive Graham Kerr wouldn’t be drawn on the listing price but argued the company offered long term value for shareholders.
“We think we have high quality, well maintained assets that have been cash-generative throughout the (commodity) cycle,” he told reporters in Perth.
“We’ve spent a lot of time talking to investors about why we think South32 is a good investment and in the end they will make up their own mind and the share price will reflect that.”
South32 is also due to start trading on the Johannesburg Stock Exchange and the London Stock Exchange later on Monday.