Cut-price Somerfield float finds buyers

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Stockbrokers to Somerfield's cut-price flotation said yesterday that initial orders from City institutions were encouraging, though some analysts and fund managers were only giving the new issue a 50-50 chance of success.

NatWest Securities, broker to the pounds 480m float, said it had received "quite a few" orders by close of business yesterday, though a number of institutions were still "biding their time". NatWest said that last week's reduction in the price from the original 180p-190p range down to 160p had tempted several investors to take a second look.

Of the institutions seen, NatWest claims that more than half had expressed interest while other smaller funds were also getting involved. Some US institutions have expressed interest even though they were not targeted in the company's presentations. It is understood that some of the largest City fund managers have yet to meet Somerfield's management, though meetings are scheduled for the next two days. One said: "We often prefer to see companies at a late stage as there is usually more information around."

NatWest is confident the retail offer, which closes tomorrow, will be over-subscribed.

The City is split on Somerfield's chances of success. Some feel the price cut has made the float more attractive; others believe the former Gateway supermarkets business still has fundamental problems.