iTouch valued at £200m as issue price is cut 40%

Shares in iTouch, the mobile phone information provider, were yesterday set at 70p ahead of next week's public offer, valuing the business at around £200m.

Shares in iTouch, the mobile phone information provider, were yesterday set at 70p ahead of next week's public offer, valuing the business at around £200m.

The flotation price is 40 per cent below the 115p mid-price indicated by iTouch earlier this month when it announced details of the forthcoming London listing. The company is raising £42m, net of expenses, through the issue of 70 million new shares, equivalent to 25 per cent of the enlarged equity. The money will be used to accelerate the roll-out of iTouch's services.

Ivan Fallon, chairman of iTouch, said it was "a heck of an accomplishment" to get the offer away in current market conditions. "Public share offerings are being pulled left, right and centre or downsized dramatically," he said. "The market out there is pretty tough for smaller IPOs in the technology and media sector, particularly companies like iTouch which are at a fairly early stage of development, so we are very pleased with the price."

Following the share offer Independent News & Media, owner of The Independent and Independent on Sunday, will hold a 50 per cent stake in iTouch. The two co-founders of the business, Avi Azulai and Wayne Pitout, will own 20.8 per cent and APN News & Media will hold a 4.1 per cent stake.

Together with £9m of cash in the balance sheet, the proceeds of the flotation will leave iTouch with £50m to develop its internet portals and fund losses over the next two years. The portals provide a mixture of news, business and sports information and entertainment guides.

About £30m will be spent on marketing iTouch's WAP (Wireless Access Protocol) service. In the UK it will be one of the top 20 portals.

The company has already launched in South Africa, Ireland, the UK and New Zealand and will start services in Australia and Israel in the next fortnight.

At present iTouch generates most of its revenue from call charges but the plan is to expand aggressively into m-commerce, earning commissions from business conducted on the internet.

None of the current shareholders in iTouch are selling any shares in the offer. Dealings in the shares begin on 2 August. The co-ordinator and bookrunner for the global offering is Merrill Lynch while Davy Stockbrokers of Ireland and West LB Panmure are acting as co-lead managers.