Energis flotation fails to ring up a premium

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The Independent Online
The stock market flotation of Energis valued the business phones group at pounds 850m yesterday, short of the pounds 1bn valuation predicted by some analysts. But Energis and National Grid, its parent, insisted they were delighted with the price-tag, as Chris Godsmark, Business Correspondent, reports.

National Grid, which is selling 26 per cent of Energis, priced the shares conservatively at 290p yesterday, in the middle of the 250p to 325p range in the marketing prospectus.

When trading began at 2.30pm in London the shares rose briefly to 295p, before slipping back to 292p when the stock market closed. The share issue was three times oversubscribed, with investors in the UK given half of the shares on offer, while 37.5 per cent were allocated to investors in the US.

Some analysts had predicted Energis would break through the pounds 1bn valuation barrier, but Mike Grabiner, chief executive, said the price had been set to encourage long-term trading stability.

"We're absolutely delighted with this and the Grid are as well. At the beginning of this year who would have predicted that we'd have ended the year as a quote? This shows that the price was right," he said.

He added that publicity surrounding the float had attracted new business for the company. Energis, which has signed high profile contracts with the BBC and other media groups, announced two further deals yesterday.

The first, with US investment bankers Goldman Sachs, is to supply telephony services worth pounds 0.5m a year. Another deal with Vodafone's retail chain is worth pounds 1m and will links the stores to the mobile operator's three national call centres in Banbury, London and Middlesbrough. Mr Grabiner said more deals were in the pipeline.

The Grid added that it was "pretty happy" with the result. "The market has been a bit volatile and has fallen by 10 per cent since the research first went out on Energis. We're looking for long-term performance rather than a short term blitz on the day," said a spokeswoman.

The flotation has divided City analysts, with some arguing Energis's business focus would avoid the pitfalls of other telecoms floats, including the recent share-price plunge at Ionica, the residential wireless group.

Separately yesterday British Telecom revealed a pounds 130m drive into the phone market in the Republic of Ireland using similar technology to Energis. BT has signed a joint-venture deal with the Irish Electricity Supply Board to build a network linking business parks and large towns using power cables and ESB's existing digital microwave links.