SGB's flotation value slips back to pounds 112m

SGB, the scaffolding group being floated by the John Mowlem construction group, will be valued at pounds 112m when it comes to the stock market this month, around pounds 25m less than expectations in May. Mowlem blamed difficulties in finding quoted comparative companies to what is one of Europe's biggest scaffolding suppliers, but there was also institutional resistance to the higher valuation.

Gerry Brown, the construction group's finance director, said: "There are a lot of attractive investment opportunities for the available cash. We have to be honest with ourselves that scaffolding is less attractive than some of the more glamour industries."

The 150p-a-share price fixed upon resulted in a 30 per cent over-subscription of the 49 per cent stake in SGB placed by Mowlem among City investors yesterday morning. But Mr Brown said there had been some resistance among institutions to paying higher prices for the shares, which some observers had been expecting to be launched nearer 175p. One analyst said yesterday the shares "should be successful at this sort of level. I can see them moving ahead to 165p fairly quickly."

Mr Brown said the final value of the placing was still above the level originally mooted when the flotation process started. Then they had been thinking in terms of net asset value, which, depending on the amount of debt loaded onto SGB, is expected to be around pounds 93m.

The pricing level agreed on means SGB will raise pounds 34.3m from the flotation, with another pounds 18.9m going to Mowlem, which will book a profit of pounds 9.5m on the deal, offset by a non-cash charge of pounds 37.1m to cover goodwill previously written off. Effectively all the money raised by both parties in the float will be used to repay a pounds 50m 11.5 per cent Eurobond issued by Mowlem, which will incur a penalty of around pounds 7m as a result of redeeming it early.

Based on last year's operating profits of pounds 16m for SGB, the 150p placing price represents 12 times historic earnings, which falls to 11 based on analysts' forecasts of around pounds 18m for the current year.

Bob Stokell, SGB's chief executive, said he was "absolutely delighted" with the way the placing had gone. "We gain a terrific base of blue-chip shareholders. The oversubscription ... should lead to a buoyant and healthy aftermarket. We have an exciting future ahead."

Mr Stokell and the three other executive and three non-executive directors are putting up around pounds 250,000 to buy shares at the placing price. Most of that sum will come from Ken Minton, non-executive chairman, who is buying some 100,000 shares. In addition, executive directors are being granted share options worth three times salary, which range from just over pounds 100,000 to a little more than pounds 160,000 for the chief executive. The options are being priced at the mid-market close following the first day's dealings, which are expected on 25 June.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Graduate Recruitment Resourcer

£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

Recruitment Genius: Telesales Executive - OTE £32,000+

£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Day In a Page

General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat