The depth of investment opportunities for Australian investors looking for exposure to the fast growing industries of online retailing, information technology and software continues to expand this week. Thanks to the announcement that Grays Online, which could be considered as Australia's answer to online commerce site eBay, is set to list on the ASX.
If all goes to plan, after a shareholder vote in October, Grays will undertake a merger with listed ecommerce group Mnemon Ltd (ASX: MNZ). Currently Mnemon owns websites including DealsDirect and TopBuy. Post-merger, the combined group is forecast to have gross sales in excess of $440 million.
A mini-eBay?
Up until now the main opportunity for investors looking for exposure to the online commerce sector has been via the NZ-focused Trade Me Group Ltd (ASX: TME) which has regularly been dubbed as the 'eBay of NZ'. Interestingly, after getting off to a flying start in 2011 when it listed, the stock has since struggled and over the past year the share price has registered a decline of 26%.
One reason for this decline in Trade Me's share price has been the market's view that the business will struggle to grow at an above average rate, as such the stock can no longer command as high a multiple.
This will be a similar hurdle for Grays to contend with too. While the opportunity to analyse and potentially invest in Grays will be welcomed by the market, the company may have its work cut out in convincing investors that it is a growth stock and deserving of a growth-type multiple.
