Warburg crowned top of the flops: Of the past year's 132 floats, 77 are trading below their issue price, Independent on Sunday research reveals

S G WARBURG, one of the City's top merchant banking and securities houses, has brought more duds to the stock market than any other financial adviser in the last year, according to a survey of flotation flops by the Independent on Sunday.

The firm sponsored five of the 50 worst performing new issues, including Videologic, at half its offer price last week after just three months, and Coda Group, down 68 per cent. And it was also broker to four of the five flops it sponsored, underlining the risks of being an integrated house.

Warburg was also jointly responsible for the disastrous Eurotunnel rights issue in May, now worth just three-quarters of the offer price.

'Clearly we were involved and we take some responsibility,' a Warburg spokesman said this weekend of the firm's role in new-issue disasters. 'But that doesn't mean we guarantee a floor price.' Other firms involved in a raft of unseaworthy new issues are Coopers & Lybrand, the accountants, and the solicitors Freshfields.

Officials at all three firms insisted they had acted properly. The firms, and others that appeared frequently in the analysis, also had significant success stories to boast about. Warburg pointed in particular to the flotation of House of Fraser, noting that at pounds 413m it was worth more than double the combined pounds 152m initial value of the five flops.

However, it is the string of sinking stocks that has dented the confidence of institutional investors in large City advisers. Of 132 new issues checked, 77 had fallen in value compared with just 51 that had risen. Four had not changed. Over the period, the stock market fell 2 per cent.

The worst case is Aerostructures Hamble, which has fallen by 71 per cent.

Some investors are considering legal action against the companies that put the float together - financial adviser N M Rothschild, broker Smith New Court, accountant Coopers & Lybrand and solicitors Dibb Lupton Broomhead.

Michael Hart, the chairman of one large institutional investor, Foreign & Colonial, said he had taken the unusual step of complaining in writing about a recent float, but would not identify which one. 'The prospectus made far more optimistic noises about current trading than appeared justified in hindsight,' he said.

But Warburg said it had not received similar complaints. 'There isn't any suggestion or contention, that we're aware of, that anyone is unhappy with the prospectus aspect of any of the shares with which we were involved,' it said.

Jonathan Bartlett, head of the Smaller Companies Fund at M&G, one of the City's leading unit trust groups, accused companies and their advisers of massaging figures to get issues away.

But Brian Larcombe, chairman of the British Venture Capital Association and finance director of 3i, the country's biggest investor in unquoted companies, rejected criticism of his industry.

Mr Larcombe said: 'Since July 1992 there have been 94 venture capital-backed flotations, of which over 70 per cent have been trading at significant premiums.'

---------------------------------------------------------------- THAT SINKING FEELING ---------------------------------------------------------------- Firms with the most clients among the worst 50 flotations Financial advisers Brokers SG Warburg (5) Smith New Court (4) Robert Fleming (4) SG Warburg (4) BZW (4) NatWest (4) Smith New Court (3) Panmure Gordon (4) UBS (3) UBS (4) Accountants Solicitors Coopers & Lybrand (12) Freshfields (5) KPMG (11) Clifford Chance (4) Ernst & Young (8) Linklaters & Paines (4) Price Waterhouse (5) Dibb Lupton Broomhead (3) Arthur Andersen (5) Gouldens (3) ---------------------------------------------------------------- Comment page 2; City dreams page 3; Risky flights page 12

Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk