View from City Road: Shares for the longer term

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The Independent Online
THE MARKET'S coolness to new issues has been hard on sellers, including the venture capitalists. It is also tough on those who braved the doldrums and have applied for shares in companies such as The Telegraph, Kenwood or Anglian. The first two have gone to a discount, and Anglian looks likely to follow them when dealings start on Wednesday.

Applicants should not despair. Given the structure of the offers, a large premium was always unlikely. The fact that half the shares were sold through a placing meant that much of the potential long-term demand had been met by institutions before the public offer started. Equally, it means that any overhang of shares from unhappy underwriters should be less than in a traditional offer for sale.

The fact that they have gone to a discount owes much to the market's weakness. It has lost 7 per cent of its value in a month. None of the new issues were outrageously priced. Anglian is a sound business, just unfortunate in its timing. And MFI looks far more attractive than other retailers. As we said last week, this may not look like an attractive time to put money into the stock market but it is an excellent opportunity to switch from other retailers. Applications close tommorrow.

Sceptics might argue that there is no point in applying for shares if they are going to go to a discount. They can buy the shares cheaper in the market later. But then they would have to deal through brokers and pay dealing costs. Long-term investors should not be put off by the discounts.

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