Market gets set for flood of new issues

The continued strength of the new issues market was further underlined yesterday as a flood of companies announced plans to float or were being tipped to jump to sizeable premiums when trading in their shares begins.

In particular, the junior Alternative Investment Market continued to defy its detractors with the announcement of further additions to its growing ranks, while speculation mounted that Dairy Crest will today shrug off the BSE crisis to announce flotation plans along with its final results.

Whitecross Group will become the first chain of dental practices to float in London following a placing of 24 per cent of its enlarged capital, which values the company at almost pounds 3.5m, raising pounds 825,000 of new money to fund further expansion.

The company is one of only a few authorised to operate dental practices, which must normally be run by dentists as sole traders or partnerships. Its emergence follows a significant change in NHS funding for dental care over the past 10 years.

The result of that has been a material increase in the part of the cost of treatment borne by the fee-paying patient rather than the Government. That in turn has changed the patient from a passive user of a service to a buyer.

Whitecross has grown from one to six practices, all in London, with a total of 28 treatment rooms. All are located in shop-front premises on the high street, reflecting the new emphasis on retailing disciplines. Nine more sites are planned over the next five years.

The company made a pre-tax loss of pounds 264,000 in the year to December 1995 and financial projections forecast further losses this year and next but profits thereafter. Dealings in the shares begin on Thursday.

Whittards, the tea and coffee retailer, also announced plans to join AIM yesterday and said it had ambitions to become "a category killer in quality tea and coffee, mugs and teapots". The company's float will value it at about pounds 20m and raise a further pounds 3m for expansion.

Will Hobhouse, the managing director, who owns a third of the shares, said the group wanted to double its 79-strong shop network over the next five years while continuing its growth overseas.

Founded in 1886, Whittards only had three London stores until it began a rapid roll-out in the late 1980s. It now has shops stretching from Exeter to Edinburgh, as well as in France, Poland, Taiwan and Japan. It claims a 14 per cent share of a market dominated by Twinings.

Meanwhile, dealings begin this week in three issues with high hopes for strong debuts. Independent Energy, which sells electricity direct to business users, will be valued at pounds 13.1m when it joins AIM on Friday.

Broker Peel Hunt is placing 3.23 million shares at 100p each, a quarter of the enlarged equity to raise money to expand Independent's sales and marketing effort and to switch existing gas reserves into electricity by developing power generating plants.

Prism Rail, which has gained a 15-year franchise to run the London, Tilbury & Southend railway service, dubbed the "Misery Line", is expected to open at a large premium when its shares start trading on AIM today. The company will become the first publicly quoted train operator since the railways were nationalised in 1947. The placing, which will raise pounds 8m at 100p, was oversubscribed.

A good stock market reception is also planned for Recognition, a "neural computing" group, which is expected to go to as much as a 20p premium on the 70p placing price when dealings in the shares begin today. The placing values the group at pounds 19m.