Bottom Line: ShareLink gets it right

SHARELINK has hit on a winning formula with its no-frills telephone share dealing service. Unlike traditional stockbrokers, it approaches share dealing as just another mass marketing exercise, relying on good systems rather than personal contacts and advice.

Having established its track record, it is now capitalising on it with a stock market flotation that values the company at pounds 42m.

Half the 7.9 million shares being sold will be placed with institutions, the other half offered to the public at 250p. It is being advised by Hill Samuel, the merchant bank, and Panmure Gordon, the stockbroker.

The price represents a multiple of 16.6 times last year's earnings, which may look toppy, but expected growth this year means the prospective multiple comes down to just 11, which looks more modest.

Shares in Smith New Court, for instance, are on a prospective multiple of 12.6, and its earnings are more volatile than are ShareLink's.

Choosing a closing date of 22 July, just after BT3, should prove to be a marketing success. It has handled a large number of applications from the public. Satisfied customers will be tempted to buy the shares and ShareLink will not want to let them down.

But perhaps the best argument to show that ShareLink has got its pricing right is that it cannot afford to get its pricing wrong, as this might put off its customers.

It should have no worries, with the shares likely to go to a premium. Buy them.