The Investment Column: New issues start up again

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The Independent Online
NEW issues are showing signs of life. Having been flat on its back for the first three months of the year, the new issues market now looks like it might stagger to its feet before the summer. True, there is still no prospect of a return to the halycon days of 1996, when companies issued a staggering pounds 10bn in new equity. But the recent flurry of announcements suggests companies are prepared to give the stock market a go, and institutions are prepared to listen.

This is no surprise. After all, institutional investors are sitting on record piles of cash which are growing by the day. It only makes sense to recycle this into small firms which need the capital.

Last year, that logic was undermined by the rush into large companies and the subsequent underperformance of small-caps. In the first quarter of 1998, the looming Budget also put many firms off. With investors once again warming to small companies and the Budget out of the way, the road should be clear.

That said, institutions are being choosy. Given the booming demand for information technology stocks, Computacenter looks assured of a successful debut. Leisure companies like Thomson Travel Group should also prove popular. And, judging by yesterday's announcement from Taylor & Francis, publishing and media remain in demand. Manufacturing companies, however, are unlikely to get a look in until the pound weakens and sentiment turns. There's also a question mark over retailers, with Sports Division and New Look appearing to have put their flotations on hold.

So any company that makes it to the market is bound to have good prospects and a proven track record. Given the pent-up demand for quality stocks, however, investors should be careful that, in the rush to get hold of some shares, they don't end up overpaying.

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