Retail billionaire Gerry Harvey said he thought the "world had gone mad" when investors paid up in the $520 million float of the now-defunct Dick Smith business.
Dick Smith's receiver, Ferrier Hodgson, announced on Thursday that it was closing the electronics retailer's doors, putting about 3000 staff out of work.
Dick Smith to close remaining doors for good
Fairfax retail reporter Catie Low explains the impact of Dick Smith's store closures after receivers failed to find a buyer.
Mr Harvey said Dick Smith's profits evaporated years ago, prompting then-owner Woolworths to sell the business on the cheap to private equity firm Anchorage Capital in 2012.
"Then five minutes later this bloke [Anchorage Capital] dresses it up and sells it for $500 million [in 2013], and I'm looking at this and saying 'I don't believe this, this business is stuffed'... I'm thinking I wouldn't buy these shares for 10¢, let alone $2," he said.
"I'm looking at all this and thinking to myself: the world has gone mad."
The Harvey Norman founder said while some people might claim Anchorage Capital still had a moral, if not a legal, obligation, he didn't believe the private equity firm cared.
"My opinion is they [Anchorage Capital] will never give back 2¢ ... Now an individual might do that [provide some financial support] - Clive Palmer might even do that - but I doubt private equity will do it," he said.
His comments come as Harvey Norman reported a 30.7 per cent jump in first-half profit to $185.5 million.
Sales across Harvey Norman franchise stores rose $193.8 million to $2.72 billion for the six months ended December 31.
Sales of lifestyle and homemaker goods such as furniture, bedding and whitegoods have been boosted by buoyant new home construction and strong house prices in Australia.
"Solid activity in the housing sector, higher home prices, lower unemployment and low interest rates are all supportive of continuing housing development and dwelling and retail spending," the company said.
Australians broke ground on a record 211,860 new homes in 2014-15, up 13 per cent on the previous record of 187,000 set in 1994. The Housing Industry Association is tipping the 2015-16 year to exceed 200,000 new home starts.
The east coast building frenzy is so hot that construction materials group Adelaide Brighton said on Thursday the industry was struggling to supply enough cement.
Mr Harvey said the market was hot and the electronics, computers and technology segment was enjoying a "mini-boom".
He said at a recent conference in Melbourne, his technology staff and suppliers were "pumped" because their incomes were doubling or even tripling".
"I think it's hot and in the middle of this hot sector you've got Dick Smith going over, which makes it even hotter for the people that are in business," he said.
"It is years since I've looked at the figures and got so excited."
Dick Smith's woes boosted Harvey Norman's sales in January and February, but Mr Harvey downplayed the significance of his rival's demise.
"Dick Smith is not what you would call a major competitor of Harvey Norman," he said.
Excluding property revaluations, Harvey Norman's first-half profit rose 22.7 per cent to $170.7 million.
Deutsche Bank analyst Michael Simotas said the result was strong across all retail divisions.
"Weak cashflow is our only criticism, but this company has a track record of delivering on cash over the long term ... we expect meaningful consensus upgrades," he said in a note.
Harvey Norman's Irish business turned a profit of $800,000, up from a loss of almost $5 million in the same period last year, while the Asian business swung to a $5.5 million profit, from a $10.9 million loss last year.
Shares in the retailer were down 10¢ to $4.51 at 2pm AEDT on Friday.