CSR pricing shows investors regaining appetite for floats
A flood of stock market flotations was predicted yesterday by brokers after three companies made highly bullish announcements regarding initial public offerings (IPOs).
Cambridge Silicon Radio (CSR), the technology group, announced it had raised £78.7m from its IPO with shares being priced by broker CSFB at 200p, at the top of its 160p-200p range. The shares closed the day at 246.25p revealing strong demand. At the same time Eircom, Ireland's biggest telecoms group, announced plans to float on the London market in the first half of March, raising at least ¤300m and valuing the business at ¤3.5bn, including ¤2.2bn of debt. OHM, a new oil exploration company, also said it would proceed with its £30m flotation, while on Wednesday Civica, another technology company, said it planned to float with a value of £79.2m.
There is now a growing list of companies preparing to come to the market with nearly 40 companies already planning IPOs, both on the full, official list of the London Stock Exchange (LSE) and on AIM, the LSE's junior market. The activity is expected to increase as the year develops, making 2004 almost certainly the busiest year for floats since the height of the boom in 2000. According to LSE figures, there were just 17 floats in the whole of 2003 on the main market, with a value of £4.7bn, while AIM saw 66 IPOs in 2003 with a total of £1.6bn.
Brokers believe that institutions are showing a renewed appetite for good quality companies but are far more discerning than in the previous technology-led IPO boom. Tim Linacre, the chief executive of capital markets at Lazard, the investment bank which recently bought brokers Panmure Gordon, said: "There is appetite for good quality companies without a doubt, but institutions are being very selective so advisers are having to be careful. Institutions are being very straightforward and severe. They are looking at businesses and saying: 'If we invest in this, will we make money?' They want the IPO to be properly done, the business to be in excellent shape with a strong growth story, and properly priced and structured."
Brokers are coming up with ways for good quality privately owned companies to float, allowing their backers to sell 100 per cent of their holdings, further encouraging IPO activity.
Numis, for instance, is floating Centaur, a media company, for about £140m-£150m. It has formed a new company to buy the business, which it pays for by simultaneously issuing shares to institutions. This is a new form of the so called "accelerated" IPO pioneered by Collins Stewart to handle last year's Center Parcs float. Centaur pulled a float in 2001, since when profits declined but investors are still keen to back the group, further reflecting the strength of the IPO market.
- 1 Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
- 2 The confessions of men who ordered mail-order brides
- 3 UK weather: Britain braced for snow as arctic air mass moves in
- 5 'Isis' schoolgirls: Missing British teenager tweets picture of her Syrian takeaway
Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
Aaron and Melissa Klein: Oregon anti-gay bakers ordered to pay $135,000 after refusing to make cake for same-sex wedding
UK weather: Britain braced for snow as arctic air mass moves in
Power of Nepal earthquake was equivalent to 20 huge atomic bombs
Nepal earthquake video: Terrifying footage shows moment avalanche hit Everest Base Camp
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
iJobs Money & Business
£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...
£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...
£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...
£45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...