Market confusion as builder pulls £450m flotation


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The Independent Online

Investors were left baffled yesterday after a national housebuilder, Miller Homes, pulled plans for a £450m flotation, blaming “financial markets volatility”.

The decision was puzzling as the stock market has been rocky in the past few days, but yesterday resumed its upwards march. Shares in construction companies have overall performed robustly in the past six months, with the likes of Crest Nicholson, Bovis Homes and Barratt all up 4 and 5 per cent despite coming off slightly more recently.

 Miller is the first company to pull a stock market float since the spring, when Fat Face and Wizzair both cancelled their plans to list in London. Last week, RAC’s owners chose not to float, but only because they had a more attractive takeover offer from Singapore’s sovereign wealth fund.

Meanwhile, the commercial bank Aldermore  pressed ahead with its flotation plans yesterday.

Analysts at broker Shore Capital were disappointed by Miller’s decision, saying: “The reasons given for pulling the float are a little hard to accept.”

Shore’s Robin Hardy suggested Miller could be pulling the plug because investors were not biting at the kind of valuation its owners were after. Shares in the sector, while robust, have slightly failed to keep pace with some other industries.

The broker speculated that if investors had been refusing to pay more than £400m, the backers will have pulled the float. It looked like the pricing was already falling below Miller’s backers’ hopes at around £450m.

Mr Hardy said he thought the company could be worth nearly £540m although he noted the fall in the Nationwide house price index earlier in the week could have put people off.

Miller is owned by the private equity giant Blackstone, through its GSO Capital Partners offshoot, as well as the taxpayer bailout banks RBS and Lloyds.

The company’s statement  read: “In light of the recent financial markets volatility, the shareholders of Miller Group have elected not to proceed at this time with a public offering of Miller Homes.”

Miller said: “The shareholders are excited to support Miller Homes in its next phase of growth as the company builds upon the momentum evidenced in its recent operational and financial results.”

It is understood Miller had not even started formal meetings with potential institutional investors when it decided to halt the float.

By contrast, Aldermore, a so-called challenger bank aimed at taking on the big players, pressed ahead with its float plans, announcing a price range of 217p to 265p a share. At the mid-point of that range Aldermore would be valued at £800m, with a top value of £880m. Set up in 1999, it has some 155,000 mainly small business customers. Final pricing is due on October 17 when dealing in the shares is expected to start.