City unsettled by talk of slowdown in IPOs

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The Independent Online

The London Stock Exchange signalled yesterday that an ebullient market for initial public offerings may be running out of steam, days after four bulge-bracket banks failed to get away a planned flotation of the Hogg Robinson travel business.

Quarterly figures from the LSE showed that the number of new issues on the main market fell to 33 during the five months to the end of August from 46 over the same period last year.

On the Alternative Investment Market, 177 companies sold shares for the first time, 28 per cent fewer than in those five months in 2005.

The data prompted some City experts, including Katrina Preston at the stock broker Bridgewell Securities, to suggest that the London IPO market may have seen its best days, for the time being at least. "We expect the primary market is at, or close to, a cyclical peak," she told clients.

London has reaped the benefit of stifling American regulation, ushered in to protect investors in the post-Enron world.

Companies that would otherwise have looked to New York to raise money have instead come to London to tap into its concentration of expertise, cheaper listing costs and wash of funds looking for a home.

Foreign companies have flocked here. The state-backed Russian oil giant Rosneft raised $10.4bn (£5.5bn) in July. TMK and Uralkali are among another rash of enormous Russian industrial groups planning London flotations.

Clara Furse, the LSE's chief executive, has made London's success a key plank of her defence of its independence. She, and the wider City, is likely to be unsettled by suggestions of a slowdown.

The traditional summer lull this year was caveated throughout by promises from stockbrokers and investment bankers alike of a glut of flotations, mergers and acquisitions supposedly in the blocks and eager to go in the final three months of the year.

They were given pause for thought earlier this week by the embarrassing failure of Citigroup, Credit Suisse, Merrill Lynch and Lehman Brothers to sell shares in the corporate travel business Hogg Robinson to institutional investors at a price they earlier deemed achievable to Permira, the private-equity owners of the business. The aborted float cast a deeper shadow over the so-called competitive IPO process and did little to enhance the reputation of Lazard, Permira's advisers, within some quarters of the City.

The number of new issues in London may be on the wane, but their value doubled during the period to £24bn.

Share trading continued to boom in the five months to the end of August on the LSE's Sets electronic trading platform. At 315,000, the average number of Sets trades per day was 58 per cent more thanthis time last year. LSE shares eased 8p to 1,229p.