Virgin Mobile set to price at 200p to get flotation away

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The Independent Online

Richard Branson's Virgin Mobile float looks set to be priced this morning at about 200p - the bottom of its revised price range.

Richard Branson's Virgin Mobile float looks set to be priced this morning at about 200p - the bottom of its revised price range.

However, while Virgin Group will be anxiously awaiting how the market greets the float of its mobile phone operator, investors yesterday gave their backing to smaller, high-growth stocks over larger, more high-profile floats.

Three companies listing on AIM enjoyed a buoyant first day's trading, while shares in Premier Foods, the £527m main market debutante, were left becalmed. Premier's shares opened at 219p and finished down 0.25p. However, Hamworthy, Blueheath Holdings and Meridian Pretroleum all saw profitable debuts.

But despite the obvious investor appetite in some parts of the market, other up-coming IPOs were still left feeling uncertain as to how the market will greet them. Virgin Mobile will probably be priced at 200p, guaranteeing the float gets off the blocks, but well below the original hopes of the group.

Mr Branson was forced to lower the price range of the Virgin Mobile IPO to 200p to 220p on Monday from its original 235p to 285p. He also had to reduce the amount of the company he was selling from 37 per cent to 25 per cent.

Virgin Mobile was last night putting on a brave face over the apathy shown by investors for Virgin Mobile's original float proposals. Rumours suggested that the bankers to the float, JP Morgan and Morgan Stanley, had managed to cover their order books twice over, suggesting a late flurry of interest in the company's shares, which could allow Virgin Mobile to float at, or just above, the bottom of its new price range. Analysts at Goldman Sachs issued a research note saying that fair value for Virgin Mobile was between 210p to 240p and that investors had been justified in demanding a discount for the uncertainty and risk accompanying the float.

However, a knot of smaller companies floating on AIM yesterday showed investors still have an appetite for IPOs. Shares in Hamworthy, a world leader in fluid handling systems for the gas industry, saw its shares climb to 129.5p after being priced at 109p. It was brought to AIM by Collins Stewart. The 19 per cent rise in its share price saw the company's value rise by £7.6m to £47.6m.

Blueheath, a grocery wholesaler, saw its shares rise from 121p to finish its first day of trading at 137.5p, boosting its market value from £49.7m to £56.4m. While Meridian Petroleum ended up 16 per cent, adding £2.7m to its original value.