Abacus placing will be at 140p

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The Independent Online
SHARES in Abacus, the electronic components distributor, are to be placed with institutions at a flotation price of 140p each, writes Robert Cole.

The price is equivalent to 19 times earnings per share for the year ended last September.

Abacus sells a range of items for component manufacturers. It holds the UK franchise to distribute products for 25 companies including 3M, Panasonic and Toshiba.

The float will raise pounds 15m, of which pounds 3.1m will go to the company to clear debts. Three directors - Brian Murdoch, Peter Griffith-Jones and Peter Warsany - will take out about pounds 5m between them and the biggest shareholder, the Merchant Navy Officers' Pension Fund, will receive another pounds 5m.

The directors and the pension fund are all liquidating about one-third of their holdings. After the float the three directors will be left with 11 per cent of the company each and the fund 20 per cent.

The present management team was backed by the pension fund when it bought Abacus from its founders in 1989. In the five financial years since then profits have climbed from pounds 353,000 to pounds 2.9m.

The placing p/e multiple of 19 times is higher than the average for the electronics sector of 17.5 times. However, Ababcus compares itself most closely with Farnell and Electrocomponents, both of which trade on multiples in excess of 20 times.