ProStrakan to slash float price

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The Independent Online

ProStrakan, the Scottish drug development company planning a stock market listing in the next few days, is braced to cut its valuation in order to attract enough investor interest to secure its flotation.

ProStrakan, the Scottish drug development company planning a stock market listing in the next few days, is braced to cut its valuation in order to attract enough investor interest to secure its flotation.

The company is considering accepting a valuation around 15 per cent below the mid-point of the £160m to £190m it most recently indicated.

The cut is the second within a month. The company originally indicated it could have a value of up to £290m. It has been told by fund managers that a valuation of £150m, before the new money being raised, will be more acceptable. It is also considering reducing the £50m it plans to raise in new money from the flotation.

The pricing of the issue was delayed yesterday to allow for a final round of meetings with US investors, who are expected to make up a significant proportion of new investors.

A final decision on how - and whether - to proceed will be made by the end of the week, when the company is likely to argue that the IPO market has cooled significantly since it began marketing its shares. Fund managers are supportive of the company's strategy but have become very price sensitive, it will say.

Warburg Pincus, the private equity firm, has a 44 per cent stake in ProStrakan, which has sales of more than £20m a year from products, including treatments for osteoporosis or brittle bone disease.

Harry Stratford, chairman of ProStrakan, is keen to generate sufficient demand for the shares to ensure a strong after-market, and its performance is being monitored by bankers across the biotech and pharmaceuticals sectors. Several smaller biotech floats have been canned in recent weeks after earlier IPOs fell below their issue price.

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