P&O and Sondex placings hint at market's revival

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The Independent Online

The recent recovery in the London stock market was underlined yesterday as P&O successfully placed shares and Sondex, an oil support services company, announced it would become next week the first main market new issue of the year.

Sondex, which provides technical equipment to the oil and gas industry, will be raising £27m, giving it a market value of £39m. Dealings in its shares are expected to start on 12 June, slightly ahead of those in Benfield, a reinsurer which is raising £100m in a main market listing. There have been a few listings on the junior market AIM this year, including Northumbrian Water.

P&O placed shares to raise £120m to fund the acquisition of an Indian container port business. It is understood that the offering was three times subscribed. Analysts said it was significant that a deep discount was not necessary to get it away. The P&O shares were placed at 220p - compared with an opening price of 230p - by CSFB and WestLB Panmure.

Tim Linacre, the chief executive of WestLB Panmure, said in the past three weeks, the market had started to show more confidence, with players speaking more positively. The FTSE 100 index broke through 4,000 points last month.

"Suddenly we are seeing an appetite for equity. But this comes with the obvious caveat that it must be properly priced, good quality companies. I don't want to overstate it, but there's a better mood," said Mr Linacre.

Some analysts said that even for a company the size of P&O with solid operations and a very long history, the sort of placing it pulled off yesterday would have been very difficult two months ago.

Mr Linacre said that fund managers, who had moved increasingly into bonds last year, were seeing signs of a rebound in equities and they "don't want to miss it".

P&O bought Mundra International Container Terminal, which has a 28-year concession to operate a deep-water terminal on the Gujarat coast in northwest India, from the Adani Group.

The Sondex issue was also over-subscribed. The company was founded in the mid Seventies and employs 94 people, mostly at its head office in Hampshire. Last year, it made an operating profit of £4.5m on turnover of £14.5m.

The company designs and produces electro-mechanical technology used in wells. Martin Perry, the chief executive of Sondex, said: "The additional funding will give us the opportunity to accelerate market penetration and broaden our range of technologically innovative products."