The Investment Column: Timely float for Game

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The Independent Online
THINGS may be a little patchy on the high street at the moment but no one seems to have told the computer games retailers which have been having a storming run. Given the popularity of the sector at the moment Game has timed its float nicely. The market for entertainment software is growing and the City has watched the zooming share price of Electronics Boutique, the main quoted rival.

The institutional placing at Game has already proved a success at 200p per share. The question now is whether smaller investors should follow suit when trading in the shares begins next week.

The issue has certainly not been priced cheaply. At these levels the shares trade on a historic rating of 25.

While the two companies are bracketed together, there are important differences. The product mix is broadly the same, as is pricing, but while EB's stores are smaller with a "no frills" lay-out, Game operates from larger outlets with a more design-led interior. Analysts also point at that while EB is already reaching saturation point with 152 stores Game has just 66 so still has plenty of scope for growth.

Dixons offers a potential competitive threat. Game points out that the small size of Dixons stores and the range of merchandise it has to carry means it will not be able to be authoritative in its offering.

At 200p the shares offer reasonable prospects. If they go to a healthy premium on 3 June they may start to look to expensive. But worth a look.