New issues in demand as flops are forgotten

Flotation boom: Three companies come to the market and find surprising strength
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The Independent Online
Further evidence that the new issues market is back to rude health came yesterday when three companies revealed strong interest in their flotation plans.

"We were a little surprised," admitted Ron Zeghibe, chief executive of the outdoor advertising group Maiden, which is joining the main stock market next week. "Demand for our shares has been pretty exceptional."

The new issues market has been in the doldrums in recent years after a number of spectacular stock market flops, most notably the computer service group McDonnell Information Systems (MDIS) and the aircraft components manufacturer Aerostructures Hamble.

But, encouraged by a buoyant stock market, investors have returned to the sector with interest in recent months.

Maiden, which owns 25,000 poster sites around the country, was expected to be worth at least pounds 65m but a placing price of 220p announced yesterday will value the company at pounds 86.5m when dealings in the shares start next Tuesday.

The placing will raise pounds 17.9m to repay debts of pounds 37m incurred when Mr Zeghibe bought out venture capital partners Morgan Grenfell Development Capital last year.

The biopharmaceutical group Vanguard Medica, the largest of the companies to reveal flotation details yesterday, also got a friendly reception in the City. Vanguard said its placing of 11 million shares at 450p was several times oversubscribed.

Estimated net cash proceeds from the placing were around pounds 46.5m - some pounds 10m higher than originally expected.

The new capital from the placing, which values Vanguard at pounds 111.5m, will be used to fund research of existing compounds and the acquisition of new compounds.

Vanguard is building a portfolio of new drug candidates through licensing and collaborative agreements. The company has an existing product line of five compounds, including treatments for migraines and inflammatory conditions. Trading in the shares is also due to begin on Tuesday.

Undoubtedly the highest-profile share launch came in the shape of the lingerie and nightwear specialist La Senza.

It is joining the junior Alternative Investment Market via a placing of 13.3 million shares at 150p each, valuing the company at over pounds 50m and raising pounds 19.4m. That compares with the pounds 15m La Senza originally hoped to raise to fund expansion to more than 152 outlets over the next five years, compared with the 22 it has now. La Senza plans to roll out its premium brand, which is pitched above Marks & Spencer, the dominant player in a British lingerie market worth almost pounds 1.5bn.

La Senza occupies a similar niche to Knickerbox, but the latter is a kiosk operation with smaller stores concentrating on bras and knickers whereas La Senza offers a wider range of fashion items.

Competition in the sector is expected to hot up. Last year, Sheffield entrepreneur Stephen Hinchliffe's Facia group bought the Contessa chain of women's lingerie shops and promised to redesign the range and broaden its appeal beyond women over 35.

The La Senza concept was developed by Suzy Shier, a quoted Canadian company which launched shops in the UK at the end of 1994.