IPO market in chaos as second float is pulled

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The Independent Online

The burgeoning IPO market was dealt a further blow yesterday after Ark Therapeutics, one of the UK's biggest private biotech companies, pulled its £130m float.

The burgeoning IPO market was dealt a further blow yesterday after Ark Therapeutics, one of the UK's biggest private biotech companies, pulled its £130m float.

The move came just 12 hours after Punch Taverns, the pubs group, was forced to abandon its £680m flotation, fuelling fears that the pipeline of companies poised to seek a stock market listing would struggle to interest investors.

Nigel Parker, Ark's chief executive, blamed a deteriorating market sentiment, adding that investors had gone cold in the past few days of presentations. "We were received throughout the roadshow in a consistently positive way, so it was down to general market sentiment," he said.

While Punch said it based its decision on recent market conditions, not helped by the poor debut for HMV Group, the music retailer, analysts criticised the company's advisors for setting the price range too high at 250p to 300p per share.

City sources said that institutional investors had sought to drive the price down because of the number of companies waiting to float. These include William Hill, the bookmakers, Focus Wickes, the DIY retailer, John Wood Group, the oil services company, and Intertek Testing Services, a company which tests, inspects and certifies products such as textiles, toys and chemicals. All four yesterday confirmed their intention to press ahead with a listing in the next couple of months, claiming Punch's problems were "company specific".

Giles Thorley, Punch's executive chairman, said the company would "wait to see if the market changes" before deciding whether to try again. He added that he was "very relaxed" about the decision, which was made just hours before shares in Punch were due to start trading. Mr Thorley stood to net £14m from the listing, while Hugh Osmond, the serial entrepreneur who built up the company with private-equity backing, would have received £20.5m.

The decision to abandon Ark's listing was a further setback for a number of venture capital firms that have viewed the recent flurry in IPO activity as a good opportunity to offload their investments. Although loss-making, Ark has a cash pile of more than £20m and little need to raise new money. The flotation was planned as an exit for its venture capital backers, which include Sir Christopher Evans's Merlin Biosciences.

Separately, Prada, the Italian luxury goods group, yesterday revived plans to list on the Milan stock exchange this summer. The company shelved plans to float last October after quoted rivals such as Gucci and LVMH saw sales collapse after 11 September. Prada, which is likely to sell a 30 per cent stake, is expected to be valued at about €5bn (£3.1bn).

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