Umbro IPO gets off to a decent start

Umbro, the sports company which supplies the England football team, received a reasonably warm reception in the City yesterday after the company confirmed it had placed its shares at 100p.

Umbro, the sports company which supplies the England football team, received a reasonably warm reception in the City yesterday after the company confirmed it had placed its shares at 100p.

Umbro's shares were changing hands at 110p yesterday afternoon on the grey market, before the formal flotation next Wednesday, lifting the market value of the 84-year-old firm to about £156m.

However, Umbro's majority owner - the private equity firm Doughty Hanson - has had to climb down dramatically from its initial hopes of placing the shares at between 150p and 190p, with a view to raising more than £70m of new money. It will now raise £50m, Umbro said yesterday.

When its bankers, Cazenove, tried to persuade institutional shareholders to accept the higher price earlier this week, they met a cold reception. Market sources said Umbro, which has timed its initial public offering to come just before the Euro 2004 football championship, was popular with investors but had been hit by the wider uncertainty in the stock market.

A spokesperson for Umbro said its book had been "very well covered" at the 100p level. "In these markets this was the right level to price the issue. It is market-related rather than company specific," she added.

Peter McGuigan, a former professional footballer who is Umbro's chief executive, will reap £2.7m from the accrued dividend on his preference shares, and from redeeming some of those shares. The rest of his preference shares will be converted into ordinary shares, bringing his total holding to 6.8 million shares.

The cut-price IPO was the second setback this week for Doughty Hanson, which on Wednesday postponed the flotation of another investment, the German car parts and accessories group Auto-Teile-Unger.