Good omens for Graham Group debut

GRAHAM Group, Britain's fourth- largest builders' merchant, is well- placed for a strong market debut next week after the offer-for-sale element of its flotation was over-subscribed, writes Tom Stevenson.

By yesterday's close, applications had been received for 58.8 million shares, 1.5 times the 40 million on offer. Anyone applying for more than 2,000 will have their allocation scaled back.

The remaining 75 million shares were placed with institutional investors at 183p, valuing the group, which has been a part of BTR since 1983, at pounds 210m. Dealings will start next Tuesday.

Analysts expect the shares to move to a small premium thanks to the decision to float the company at a discount to peers such as Wolseley and Travis Perkins.

Expectations of pre-tax profits of pounds 17m, up from pounds 13.5m last year, put the shares on a prospective price/earnings ratio of 18.5. Last week, the group said it would have paid a dividend of 4.6p, implying a yield of 3.1 per cent, had its shares been quoted for the whole of 1993.