Yell quietly delighted despite muffled stock market debut

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The Independent Online

Shares in the directories business Yell got off to a decent start on the stock exchange yesterday in a move that puts the company on course to secure a place in the FTSE 100 index later this year.

The stock, which was priced at 285p a share, rose as high as 306p in morning trading before falling back to close at 289.5p - a gain of about 1.5 per cent on the day.

About 281 million shares in Yell changed hands - making it the most heavily traded stock on the London market yesterday, ahead of shares in the mobile phone operator Vodafone, which usually tops that list. The success of the flotation of the company - the biggest IPO that London has seen for about two years - will be taken as a positive sign for equity markets.

Yell confirmed yesterday it had increased the size of its share offering by nearly 100 million shares because of strong demand from institutional investors. The 285p flotation price - which was priced toward the top end of the 250p to 300p a share range - gives Yell a market capitalisation of just over £2bn.

John Condron, Yell's chief executive, said: "We are delighted with the way new investors have embraced the Yell story. The strong response to the Yell share offer reflects the quality and potential of the business. We believe we are well positioned to deliver growth and continued strong cash conversion." The flotation of Yell was carried out at high speed - over the course of just over a week.

The company was forced to abandon its flotation plans last year after stock markets took a turn for the worse.

The increased offer size raised a total of £1.14bn, well above the £850m Yell was previously targeting. Yell will get about £433m from the flotation - cash it will use to pay down debt to around £1.3bn.

The size of Yell's primary offer of new shares to investors was unchanged. Instead, the number of shares being sold in its secondary offer, by its two venture capital owners - Apax and Hicks, Muse, Tate & Furst - was increased.

The pair have sold £707m worth of shares in the flotation - up from £417m previously - a move that will give them a combined stake in Yell of about 30 per cent. Management will own about 5 per cent of the equity.