City welcomes Maiden placing The Investment Column

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The Independent Online
The City's appetite for new issues remains undiminished if the warm reception given to outdoor-advertising group Maiden is anything to go by. Maiden, which owns 25,000 poster sites around the country, was expected to be worth at least pounds 65m when dealings start next Tuesday. In the event, a strong level of interest from institutional investors ensured the 9.6 million shares will be placed at 220p, valuing Maiden at a top-of-the-range pounds 86.5m.

The placing will raise pounds 17.9m to repay debts of pounds 37m incurred when chief executive Ron Zeghibe bought out venture capital partners Morgan Grenfell Development Capital last year. Directors will retain about 60 per cent of the equity after the flotation

On one level, Maiden is benefiting from scarcity value. Shares in More O'Ferrall, the only other quoted operator in the sector, have advanced in leaps and bounds on the back of strong growth in UK outdoor-advertising spend, which last year grew by up to 9 per cent. The industry forecasts similar advances this year.

A consolidation of the sector, which last year saw Maiden buy British Transport Advertising for pounds 1.8m, has led to fewer and more professional players in the sector. Site illuminations, the steady growth in roadside traffic and better audience measurement techniques have also helped. And the increased fragmentation of the television, magazine and radio markets means poster sites could become the only medium capable of delivering mass audiences to advertisers.

How much all this is worth to investors is anybody's guess. More O'Ferrall, the market leader in the UK, stands on a forward PE of almost 18 times and should command a higher rating thanks to a good track record of organic growth and lower debt levels. Shares in Maiden are tightly priced at 15 times future earnings, but they should still go at a decent premium.