Benfield's strong debut boosts confidence in listings

Benfield Group, the reinsurance broker, had a strong trading debut on the stock exchange yesterday, making it the largest initial offering the London market has seen this year.

Shares in Benfield climbed 12 per cent from their offer price of 250p, which was at the top end of the indicative range of 200p to 260p. The stock closed at 280.5p, valuing the company at £680m.

Analysts said the strength of investor interest in the stock at the start of Benfield's trading marked a resurgence of support for company listings.

"We have had a very exciting time going round the world talking to potential investors and I'm delighted with the quality of support we received for Benfield," Grahame Chilton, the chief executive, said yesterday. "Investors haven't had much to look at in terms of IPOs recently, but the market has always been open for good quality businesses."

The Benfield float comes immediately after the successful listing of Sondex, the oil support services company, which became the first main market new issue of the year this week. It finished up 14 per cent on its starting price of 100p on its first day of trading on Thursday, raising £27m.

P&O has recently successfully placed shares to raise £120m to fund an acquisition in India, and Northumbrian Water last month listed on AIM with a market capitalisation of £520m.

The last sizeable new listing came in July last year when GUS partially floated Burberry, the fashion house, for £1.2bn.

"Lots of companies are looking at the IPO market again, but they are keeping their head under the cover in the run up to summer," said Tim Linacre, a director in corporate finance at West LB. "But by the time we get to the autumn, there will certainly be more companies deciding to go public on their plans. The focus for investors will still be on quality businesses, and I would not be surprised to see some technology stocks come to the fore. We are seeing an appetite for companies that have a good story to tell."

Teather & Greenwood, the City stockbroker, said this week it had a number of listings for the AIM index in the pipeline.

Forthcoming listings include Comet, the electronics retailer currently part of the Kingfisher group, which could have a value of £1.4bn. Aberdeen Property Investors, a spin-off from Aberdeen Asset Management, and Resourceworks, the corporate finance boutique set up by David Rowland, are also lining up to come to the market.

Benfield chose to list in London after casting eyes on the New York exchange. It cited heightened regulatory costs in the US for settling on the London market.