US demand is the key to Virgin float

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The Independent Online

Bankers to Sir Richard Branson's Virgin Mobile float will spend today anxiously waiting for the results of the company's American investor roadshow, before pricing the new issue tomorrow evening.

Bankers to Sir Richard Branson's Virgin Mobile float will spend today anxiously waiting for the results of the company's American investor roadshow, before pricing the new issue tomorrow evening.

The level of US demand is seen as the key between getting the float away within the 235p-285p price range, or whether it will have to be priced below that level. US investor support is critical to the float's momentum and how much support it subsequently wins in the City of London. The US roadshow ended on Friday night in San Francisco.

JP Morgan and Morgan Stanley, the investment banks leading the float, expect to hear this afternoon how much support the US institutions are willing to give it. The plan is to price the issue tomorrow evening, with shares starting to trade on Wednesday morning. Sir Richard is thought to be unwilling to pull the float altogether and will instead cut the offer price to below 235p to make sure it gets away.

The float of Virgin Mobile has met with scepticism from analysts and fund managers, worried about the increasing level of competition in the UK mobile phone market. Virgin is a so-called virtual network operator which means it piggy-backs on the network infrastructure of T-Mobile and trades off its own brand name.

Although Virgin Mobile sets its own tariffs, the barriers to entry to this market are relatively low. Rivals such as Tesco have also launched their own mobile phone services offering low-cost, no-nonsense packages. Tesco's partner is mmO 2.

However, Virgin Mobile has enjoyed a large degree of success so far, building a customer base of 3.5 million active customers.

Another float scheduled to make its market debut this week is Premier Foods, the owner of Branston Pickle and Typhoo Tea. It is being sold by Hicks, Muse, Tate and Furst, the private equity firm.

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