Market turmoil halts float plans

Last week's turmoil on the London stock exchange claimed its first victims in the new issues market yesterday when two companies unexpectedly cancelled their flotation plans.

Morgan Crucible, the specialist engineering group, said it had postponed plans to spin off Emblem Technology, its aerospace, sensors and instruments division, due to the adverse state of the stock market.

And Discovery Inns, an independent pub operator, also blamed recent stock market conditions for its decision not to proceed with plans for a listing.

The new issues market has boomed this year on the back of a record-breaking run for equities, with many offers for sale heavily oversubscribed. But Friday's correction, which at one stage saw the FTSE 100 index of leading shares slump by almost 170 points, has made some would-be newcomers think again.

The decision to pull the Discovery flotation is particularly significant because investors have up to now shown an almost insatiable appetite for pub retailers.

Discovery was earmarked for the main market with a price tag of pounds 50m to provide an exit for venture capital backers led by Kleinwort Benson.

Set up in 1992 as a vehicle to acquire 223 pubs from Whitbread in England and South Wales, it has expanded recently with purchases from Marstons and Allied Domecq.

It is positioned half-way between the managed themed chains such as Wetherspoon and Tom Cobleigh, whose shares have soared this year, and the groups of tenanted pubs run by the likes of Enterprise and Century.

Morgan Crucible had hoped to raise pounds 40m from the Emblem float as part of plans to focus on its core industrial ceramics and specialist chemicals businesses. Proceeds from the flotation, handled by Panmure Gordon, would have gone to strengthen Morgan's balance sheet by reducing gearing from 40 per cent to 30 per cent. Dealings in the shares were due to begin this month.

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