Newcastle shoots to top of range

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The Independent Online
Newcastle United yesterday defied its critics by pricing a controversial pounds 47.7m share issue at the top end of the range, valuing the Premier League club at pounds 193m when dealings begin on 2 April.

The news came as shares in Charlton Athletic of the First Division collapsed on their first day of trading, heightening fears that the market for football stocks had overheated.

"There are still a lot of institutions out there who are nervous about football," said Paul Deakin of NatWest Markets, Newcastle's sponsoring broker and financial adviser.

But strong demand from Newcastle fans for shares at 135p ensured its retail offer was oversubscribed seven times. To satisfy demand from 8,500 season ticket holders the number of shares available to private investors will be increased from 10 per cent of the offer, or 4 million shares, to 15 per cent.

NatWest indicated that the institutional offer, which closed yesterday, was also substantially oversubscribed. "Our list of top 10 investors reads like a Who's Who of financial institutions in the UK," said Mr Deakin.

However, he admitted some fund managers had shunned the issue because of concerns that some football clubs had become overvalued. These fears were realised yesterday when shares in Charlton Athletic closed at 17p below their issue price at 63p after touching 56p in early dealings.

Existing shareholders, season ticket holders and supporters snapped up around 1.3 million shares priced at 76p. Charlton's institutional placing was also fully subscribed at 80p per share, valuing the club at pounds 17.m.

"It is disappointing," said Ken Ford of Teather & Greenwood, the club's advisers. "But there are buyers out there and we are hopeful of getting back to the issue price before too long."

Shares in other recently floated clubs, including Birmingham City and Sunderland, are also trading at or below their offer price.

Proceeds from the Newcastle float will be used to pay off debts of pounds 21m.The club plans to abandon its St James's Park home for a pounds 90m stadium across the city.