Shares in the newly demerged Woolworths defied City expectations to surge 32 per cent yesterday as Gerald Corbett, the non-executive chairman, blamed "unnatural shareholders" for the low opening price.
Mr Corbett said that overseas investors held 25 per cent of the shares. "They bought into Kingfisher because of its international position. They wouldn't be natural holders of Woolworths, a UK retailer," he said.
The shares opened at 25p, the upper end of the range indicated by the unofficial "grey market", valuing the pick'n'mix retailer at £350m or just above the £310m that Kingfisher originally paid for Woolworths.
Heavy trading pushed the shares 8p higher to close at 33p. This valued Woolworths at £465m, which was closer to the earlier optimistic suggestion from Sir Geoff Mulcahy, Kingfisher's chief executive, that its shares would open at 30p to 40p, or £400m to £550m.
Mr Corbett put the high volume, which saw 25 per cent of the stock change hands, down to a hectic roadshow around institutional investors in recent weeks. "In the last couple of weeks, the message we have got across is that this is a good business and a great brand," he said.
Analysts described the shares' first day's trading as extraordinary. One retail analyst said: "I'm at a loss. I was expecting the price pressure to be downwards."
Among the stock's sellers were overseas investors and tracker funds, which had held Kingfisher shares because of its FTSE 100 ranking. Woolworths is in the FTSE 250 index of mid-value companies. The stock was allocated to Kingfisher shareholders on a one-for-one basis.
In total, 371 million shares changed hands, making it the market's most actively traded stock. Mr Corbett said: "The volume was amazing, bigger even than Vodafone. I don't suppose it will appreciate at 30 per cent- a-day for much longer though." Mr Corbett stands to receive a £500,000 bonus for successfully demerging Woolworths.
He said the main task now was to forget the excitement of the stock market listing and to concentrate on "delivering Christmas".
City opinion remains divided about Woolworths' prospects as an individual chain. Poor management by Kingfisher has seen stock levels spiral out of control. Mr Corbett has promised £100m worth of destocking, which the chain is half-way through.
Mr Corbett said that the retailer's e-commerce operation had stopped trading on Friday and that it was slowing down the opening of its new format Big W stores. He added: "Our task now is to calm everyone down after all the turmoil of the last 10 months. Yesterday was an encouraging start."