Shares in Cenkos Securities, the brokerage firm set up by the City veteran Andy Stewart, soared by more than 40 per cent on its first day of dealings yesterday, valuing the company at £150m and the founder's stake at £36m.
The company's main institutional backer, NewSmith Capital, placed its 16 per cent stake in Cenkos Securities ahead of the float last week at 140.5p a share. The shares ended up 43.4 per cent at 201.5p on the Alternative Investment Market yesterday.
However, NewSmith, a private investment company founded by three former Merrill Lynch bankers Paul Roy, Stephen Zimmerman and Michael Marks, paid just £1.67m for their stake last October. It was understood to be "highly delighted" to have made 10 times its money in a year.
Mr Stewart, a horseracing enthusiast who also founded the broking group Collins Stewart, cannot sell any of his shares for at least 18 months under a lock-in agreement. Cenkos is named after Mr Stewart's most successful flat horse.
Mr Stewart said yesterday that he was very happy with the success of the float. "We have built this business thanks to employing some very bright and enthusiastic people who are here because they like the atmosphere of the firm. Now that the work of getting the float completed is out of the way, we are looking forward to building the business," he said.
Market-makers said that although the shares were placed with institutional investors at 140.5p, the price had rallied in the grey market to 190p before yesterday's opening.
One market-maker said that although interest from retail investors was healthy, many were put off by the premium the share moved to - trading began with the shares at 177.5p.
They also said that there was very little "flipping" of the shares, when investors take advantage of initial demand by selling as soon as public trading opens.Reuse content