Investors eat up shares in Aussie brothel
By Sonali Paul
Melbourne - Australian investors plunged enthusiastically into the world's oldest profession on Thursday when a Melbourne company became the globe's first listed brothel.
Shares of the bordello enterprise, which hired Hollywood madam Heidi Fleiss to spice up its stock listing and touts itself as a recession-proof, five-star hotel, doubled on their first day of trading. About 1,4 million shares of the company - called The Daily Planet - changed hands.
"Obviously the price is going to go up. It's sex and everyone knows sex is a smart investment," Fleiss told reporters just before the shares started trading.
The Daily Planet's brothel, based in a Melbourne suburb, has a bar lounge and 18 themed rooms with names like Venus and Xanadu. Some of the rooms have beds and heavily chlorinated spas large enough for several guests at a time.
The company lured "mum and dad" investors with the prospect of a steady 8,4 percent dividend, stemming from revenue the company makes on its A$115 (about R575) an hour room charge. Guests pay the call girls directly.
"It is fairly defensive, isn't it? Come rain or shine, I guess the more stress one has, the more one is going to use it," said Lucinda Chan, a director at Macquarie Equities.
"You would never think that a brothel would be listed but it certainly has, and in this country first - the place down under."
Daily Planet raised A$3,75-million (about R18,7-million) after selling 7,5 million shares in the property arm of its business. Shares rose to A$1,09 (about R5) from an initial public offering price of A$0,50 (about R2,50), giving the company a market capitalisation of A$36,5 million (about R18,25-million).
The company is expected to book revenues of A$460 000 (about R2,3-million) this year from rent paid by the Melbourne brothel. That's a paltry sum compared with the estimated A$7-million (about R35-million) that changed hands at the bordello last year, most of it guest payments to prostitutes.
But the company has ambitious plans to become one of the world's largest sex companies, first aiming to build a brothel in Sydney, and then possibly following up on an idea from Heidi Fleiss to build a "Sex Disneyland" with fantasy rides.
"You may be able to have a simulator of a six-mile high club," Chief executive officer Andrew Harris told reporters.
The listing marked the company's second attempt to enter the stock exchange. It aborted its first try in 1994 in the face of then-new Victoria state legislation that subjected all investors in the sex industry businesses to police checks.
To get the listing off the ground this time, the company decided to incorporate the property side of the business separately from the brothel operation, so that investors would not be subject to the Prostitution Control Act.
The bulk of the listed company - 26 million in non-tradable shares - is held mainly by the brothel's original owner, John Trimble. Trimble and Harris handled most of the offering themselves, although a small Sydney brokerage, Cameron Stockbrokers, sold A$10 000 (about R50 000) worth of shares.
"Not one broker in Australia (besides Cameron) would deal with us before the float. But we've had half a dozen calls today from brokers who've said they would now be happy to work with us," Harris told Reuters.
The Daily Planet turned to notorious madam Fleiss to help it market the float, naming her its international ambassador.
Fleiss came out of jail in 1998 after serving 21 months of a three-year term for money laundering and tax evasion stemming from her prostitute ring for Hollywood's rich and famous.
"What they're doing in Australia is very forward-thinking," Fleiss told Reuters.
"I don't recommend prostitution as a career, but it's never going to stop. Men are always going to lie and cheat."