Leapfrog scraps float while Intertek cuts price to 400p

The new issues market was dealt another blow yesterday with the child nursery group Leapfrog abandoning its flotation plans and the quality control company Intertek confirming its shares would be priced at the bottom end of the range.

Nevertheless, trading in Intertek shares got off to a good start on their first day on the London market after the stock was sold to investors at 400p a piece – the bottom end of the 400p to 490p range.

The shares, which started trading on the market at lunchtime, jumped 8 per cent, or 33.5p, to finish at 433.5p, valuing the company at roughly £660m.

Richard Nelson, its chief executive, said, however, he was not particularly disappointed with the 400p price. "To me, the most important thing is that it [the stock] should trade up in the aftermarket. You want happy shareholders not unhappy shareholders."

The company, which tests, inspects and certifies products from toys to electrical goods to air conditioning systems, will start life with about £250m of debt.

It plans to use the £245m of cash raised from the flotation to repay some of its existing £370m of debt as well as redeem about £105m worth of preference shares.

"We are very pleased to have done it [the flotation] because we were a little constricted in our balance sheet. For our growth going forward, it's important we have a strong balance sheet," Mr Nelson said.

He said the company had had a "very good reception" from institutions and that the order-book for the shares had been "two and a bit" times covered.

Leapfrog, however, was forced to pull the plug on its planned £80m flotation yesterday after nervous investors gave the day nurseries operator a wide berth.

Last week, Punch Taverns was forced to pull its plans to float on the London market due to lack of investor support. Earlier this week, it announced the float was back on, albeit at a reduced price.