New Look stock market flotation shelved

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The Independent Online

High street fashion chain New Look shelved plans for a stock market flotation today in the wake of recent financial turmoil.

The decision marks the second time in two years that New Look's owners have scrapped an initial public offering (IPO) for the retailer.

It is also the latest in a series of market listings to be put on hold this week amid uncertainty for equities.

The private equity owner of Alton Towers and Madame Tussauds firm Merlin Entertainments was revealed today to have put the leisure group's stock market debut on ice, just a day after the same company halted an IPO for US travel business Travelport.

New Look, which is owned by buy-out firms Permira and Apax Partners, stressed that today's move will not see it bin flotation plans altogether.

Carl McPhail, chief executive of New Look, said: "We have taken the difficult decision to postpone the IPO as a result of the considerable volatility in the equity markets.

"We remain convinced of the strengths of the New Look business and its suitability as a public company. We will re-evaluate our options when market conditions improve."

New Look has 1,010 stores, including 601 in the UK, and rang up sales of more than £1.3 billion in its most recent financial year.

The group was hoping to raise around £650 million in the stock market listing to pay down debt and position it for further growth.

But its plans have been thrown off course by heightened volatility on markets in recent weeks, sparked by fears over debt levels in Greece and other embattled European countries.

The recent eurozone woes compounded a shares sell-off seen after America announced plans to tax banks and limit their activities.

London's FTSE 100 Index has recently slumped to lows not seen for three-and-a-half months and America's benchmark index closed below the 10,000 mark at one stage.

But it is also believed that investor concerns are behind the spate of IPO cancellations.

There is said to be a reluctance among overseas institutional investors to put money into UK shares generally, given unease over the value of sterling.

More specifically to New Look, investors are thought to have been worried it was trying to list at too high a price and with too much debt.

A spokeswoman for New Look insisted there was good appetite from investors and their initial feedback was positive, but said the firm would not have received the right price in current market conditions.

Since the beginning of the year, retail shares have fallen by around 11.3 per cent, according to the firm.

New Look abandoned plans to float two years ago after a lukewarm response from investors, while a £2 billion sale of the business also failed when the company was unable to agree a price with potential suitors.

Weymouth-based New Look was founded in 1969 by Tom Singh, and was taken private in 2004 by Apax and Permira for £700 million, with Mr Singh retaining a stake.

Since then its new owners have invested around £450 million in the business, although it now has an estimated £1.1 billion debt.

The IPO cancellations will be disappointing to private equity and investment bankers, with expectations for a new wave of listings as part of a market recovery.

Kraft's successful bid for Cadbury and KKR's recent deal for pet accessories chain Pets at Home were seen as heralding the return of deal activity.

But the decisions confirm the fragility of the recent New Year bounce-back, which helped drive the Footsie to levels not seen since before the collapse of Lehman Brothers in 2008.

Takeovers have also been hit by recent turbulence - the owner of discount retailer Matalan postponed sale plans earlier this week after its would-be private equity buyers baulked at a £1.5 billion asking price.

Markets will now be watching closely for an update on the expected £1 billion IPO of online grocer Ocado.

It is said to be planning to come to market in the second quarter of the year and is reportedly poised to appoint advisers.