A rule change by the Stock Exchange last year, which came into effect on 1 January, allows even the largest stock market debutants to skip a public offer altogether. Such companies can structure a new issue as they see fit.
Orange is preparing the ground for a flotation, although sources close to the company stress that a formal decision has yet to be taken. It plans to raise about pounds 500m in a flotation that will value it at around pounds 2bn.
The City is betting on a deal this spring, probably in March. At the end of the year, the giant Deutsche Telekom flotation is expected, and "all the telecom spotters will be up to their necks," as one analyst put it. It will be followed by the sell-off of Stet, the Italian public telephone operator.
However, the prospect of an issue directed solely at the City has disappointed retail brokers. "It is amazingly shortsighted if there is no retail element," said Justin Urquhart Stewart, head of private clients at Barclays Stockbrokers.
He said Orange was an ideal company to benefit from a retail issue, with the prospects of attracting its own customers and creating a loyal following.
Orange has appointed Kleinwort Benson and Goldman Sachs as its financial advisers. They will advise British Aerospace, owner of 31.5 per cent, and Hutchison Whampoa, the Hong Kong conglomerate that owns the rest, on the options for flotation, and whether there should be a retail offer.
Given its strong brand name in a rapidly growing sector, Orange would attract substantial public interest. Since the launch of its service in April 1994, it has catapulted to a size that would automatically rank it for inclusion in the FT-SE 100 index - although it has yet to make a profit.
Because an offer is almost guaranteed to attract strong institutional demand, the company may decide it would be better served to concentrate its marketing efforts on the City.Reuse content