Companies planning to list on the London Stock Exchange were handed a reality check yesterday as investors turned their backs on three of the newest entrants to the market.
Guy Hands’ wind power company Infinis made a disappointing start to life as a listed company after being floated at the bottom end of its price range.
Shares in the company crept above the 260p float price, closing at 270p during its first day of conditional trading.
Mr Hands’ private equity firm Terra Firma picked up £234m from the listing, which valued Infinis at £780m, but held on to 69 per cent of the group. The flotation is the latest step on the long road to redemption for Mr Hands, whose reputation was severely damaged by Terra Firma’s disastrous £4bn takeover of the music retailer EMI at the height of the private equity bubble in 2007.
Meanwhile, Just Retirement, another private equity-backed listing, suffered during its first day of unconditional trading on the market. The shares tumbled 2p to 195p, significantly below its 225p float price, raising fears that it had been overpriced by bankers. The group, which provides pensions to people with health problems, was sold off by private equity firm Permira for £1.12bn.
Shares in the online Russian lender TCS also tanked 4.1p to 11.5p – or 27 per cent – on reports that Russia’s parliament is considering proposals to make it harder for banks that do not have branches to issue credit cards. TCS was founded in 2007 by Oleg Tinkov, who is best known for developing a successful brewing business in the country before he branched out into financial services.
“The currently proposed new clause has been misinterpreted by some commentators and has been read as meaning that credit cards can only be collected by customers at a fixed location (ie branch),” the group said.
“Our understanding from conversations with the authors of this legislation is that the legislators intend to target unsolicited, blanket mailings of credit cards which gives us a good reason to believe that this clause will be amended.”
On a more positive note, Bonmarche, the over-50s fashion retailer, is also set to go public after pricing its shares at 200p ahead of its debut on Wednesday. The group hopes to raise £40m on London’s junior AIM market.
Ahead of more expected listings over the coming months, including Poundland and Zoopla, David Vaughan, EY’s IPO leader for UK & Ireland, said: “It’s not perhaps surprising that after a spate of new issues, investors may just be pausing a little.
“However, there are still some very good companies in the pipeline which, if priced correctly, will attract support.”