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Oxford Biomedia's debut flops

Stock market jitters hammered another two new issues yesterday when Oxford Biomedica shares opened at less than half their placing price and it emerged that Fountain Forestry was cutting by 50 per cent the amount being raised from its own Alternative Investment Market flotation.

Oxford, a biotechnology group backed by Oxford University, saw its shares start dealings on AIM at just 42.5p yesterday morning, some 52 per cent below the 88p at which the shares were priced in October. They ended slightly up at 47.5p.

Sentiment took a dive earlier this week when it was revealed that the two main underwriters, Stockton Trading, a Bahamian-registered company, and Kaj Kjellquist, a private Swedish investor, had withdrawn their combined pounds 5m commitment to underwrite the pounds 6.15m then being raised. The move forced the company to delay first dealings until yesterday and reduce the amount being raised to pounds 5m, which Oxford said was its minimum working capital requirement, although it had originally sought up to pounds 11m.

Percy Lomax of sponsoring brokers Teather & Greenwood said the company was reserving its right to take legal action against the underwriters.

The flop is the latest in a list of disappointing biotechnology flotations. Earlier this year, Cambrio abandoned plans to float, and Xenova has been forced to cut the amount being raised by pounds 2.4m to pounds 22.6m.

The news came as Fountain Forestry said its placing would raise pounds 2.25m, half the original target of pounds 4.5m. Yeoman, a navigation group that also postponed its AIM float this week, saw its shares end 4.5p down on its 175p placing price.