New issues snagged: Investor resistance has led to delayed flotations and slashed prices

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The Independent Online
COMPANIES planning to join the stock market are coming under pressure either to delay their flotation or trim back the price of their share issues, amid signs of serious indigestion over new launches.

Leading City underwriters are also thought to be demanding that newcomers reduce flotation prices because fancy ratings on new stocks were putting off an increasing number of investors.

Companies thought to have postponed their launch include the biotechnology ventures Peptide Therapeutic and Pharmakopia. Both companies had hoped to go public early this year with a market value of between pounds 50m and pounds 100m.

But a sharp drop in biotechnology stocks, in the wake of a near-400-point slump in the Footsie index in the past two months, led them to delay their debut until conditions stabilise.

Expro, the oil services group being groomed by Robert Fleming for a pounds 100m market float, is also understood to be considering a postponement.

Meanwhile, the property groups Fiscal and London Capital are expected to lower their flotation prices this week. They had originally planned to set issue prices at a premium to asset value, but are now likely to rate them at a discount.

The move has been heavily influenced by the flop of a pounds 209m offer and share placing by Donny Gordon's Capital Shopping Centres, whose public offer at 230p a share was just 14 per cent subscribed. The shares are heading for a sharp discount when trading begins this week.

Beazer Homes, sold by the parent group, Hanson, and McDonnell Information Systems, floated last week, have slipped below their offer price as has Maid, the on-line business information provider, despite a heavy scaling back of its flotation terms.

However, House of Fraser, the department store group being floated by the Al-Fayed brothers, appears to have survived the nervousness. Shares in the store group were subscribed twice and the flotation attracted 100,000 private shareholders.

Part of this success, however, was because the advisers took an early decision to scale down the offer price from a touted 200p to a much more conservative 180p.

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