That partly reflects a rash of downgradings in the building materials sector as companies like Tarmac and Meyer International have made gloomy statements on current trading. But it also suggests that the market's appetite for new shares has not met the expectations raised by post-election euphoria.
The 325p price set by The Telegraph last week was below expectations, MFI is expected to announce a price below initial indications tomorrow and Kenwood was barely oversubscribed.
Anglian is floating almost half the company, raising pounds 88.4m of which pounds 56.5m is new money, the balance from existing shareholders. Half will be offered to the public, the remainder placed with institutions.
The 210p offer price suggests that the underwriters were keen to get as much upside as the backers of the pounds 84.5m buyout from BET 18 months ago. The historic multiple of 12.2 times, based on pro-forma pre-tax profits of pounds 22.9m for the year to March, is at a discount of about 20 per cent to other companies in the light end of building materials.
The notional 5.5 per cent yield looks more attractive given that the dividend would have been more than twice covered - almost unheard of among building companies at the moment.
The key question is where profits go from here. Last year, profits rose 30 per cent, despite higher interest charges and the recession, but that was partly due to cost-cutting and rationalisation, which is now virtually complete. Anglian is confident it can continue to grow by expanding geographically and improving its products. The price is attractive enough to make investors believe it. Buy.