THE Queensland government said today it raised $4.6 billion in gross proceeds from the initial public offering of its QR National railway. .... $4.1bn worth of shares were issued.

The government was hoping to raise up to $5.05bn from the IPO of QR National, but concerns around pricing kept some investors at bay, forcing the government to retain a 40 per cent stake in the asset and to offer the shares at the low end of its targeted price range. The Queensland government is divesting QR as part of a broader asset sale program to raise money and improve its credit rating.

Retail investors bought 34 per cent of the offering at a discounted price of $2.45 and institutional investors bought 66 per cent at $2.55 per share while just over 54 per cent of the stock will be held by domestic investors. The share pricing values the company at $6.7bn.

"These proceeds will now be used to pay off debt and establish a stronger balance sheet," Queensland State Premier Anna Bligh said. The state will retain its 40 per cent holding in the company until 2012.

The shares begin trading on Monday in a closely watched debut that could, if successful, help reignite the market for public offerings here.

That QR National priced at the low end of its price range isn't a surprise. Heading into the bookbuild, the pricing of deal came under public scrutiny. Domestic fund managers were openly critical of the float, in part because the railroad is planning a capital-intensive expansion plan on which it is pegging its earnings growth expectations.

..the dark art of the float's joint lead managers entering the market and buying shares to support QR's price. The price support tool known as "the green shoe" is (very opaquely) disclosed in the prospectus.

It is a tool that, at its simplest, allows investment banks to buy about 9 per cent of all shares sold in the offering on the open market to support the price, as long as shares are trading below the offer price.

ASIC waved through this set piece of market manipulation - which expires on December 21 - apparently on the basis that QR is so unique you just don't know where it's going to trade.

Note to ASIC: isn't setting the price of QR one of the jobs the investment banks and brokers were being paid about $69 million for?

The tangled technicalities of the green shoe specify it is an over-allocation option. The technicalities mean the over-allocated stock can be bought back on the market by the investment banks, providing the price support.

Guess what? The over-allocation option - and therefore the price support - only kicks in after the Queensland government sells more than 60 per cent of stock. And the over-allocation option is limited to 6 per cent of total stock on issue.

Now 60 per cent plus 6 per cent explains why the offer sold a magic 66 per cent of the company. Not 61 per cent. Not 64 per cent. Right on the knocker of 66 per cent.

As in any float, it is hard to see where today's price lands. Fund managers may have stayed out of the dance and waited to buy stock on today's debut. Buyers may include bargain hunters and index huggers, in which case there may be strong support at $2.55. Alternatively there may be some hot money looking for a quick stag profit, and if it's not there, the hot money may sell any way.

Be certain of this: if the share price falls below the offer price, there is price support available in the form of five investment banks with about 9 per cent of the total traded shares available to buy.

If the share price is hovering above and below the offer price, read the Queensland government's victorious media releases with a degree of scepticism. The share price is more than likely being gamed.