Volatile market cuts average gain on floats to under 1%

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Investors have seen gains of less than 1 per cent on more than £36bn of new companies floating in London so far this year following recent market turbulence.

Figures from the London Stock Exchange compiled for The Independent covering the performance of 114 floats on London’s main market and junior Aim market, show the newly listed companies worth £36.15bn on admission.

But after a period of stock market turbulence brought about by factors including worries over slowing global growth, the total value of these companies had risen by just £222m to £36.37bn last week, the LSE figures show – a gain of just 0.6 per cent, excluding dividends.

The flood of firms coming to market has recently slowed to a virtual trickle as the likes of Virgin Money, the challenger bank Aldermore and the webuyanycar owner British Car Auctions shelve float plans in gloomier conditions.

The figures show mixed fortunes for some of the highest-profile floats which hit the stock market this year. The AA motoring organisation’s £1.75bn valuation is 26 per cent ahead of its value on admission, but the over-50s insurer and holidays firm Saga’s value has dropped by more than £300m since its £2.1bn float.

A host of retailers, including AO World, Pets at Home and B&M Value Retail (chaired by former Tesco chief executive Sir Terry Leahy) have also disappointed, down 42 per cent, 21 per cent and 8 per cent on their listing prices respectively.

Some retailers have managed to impress, with Poundland up 5 per cent on listing and Game Digital up 56 per cent.

The LSE’s data show 57 per cent of initial public offerings ahead of their initial market value on admission, 41.2 per cent below the float price and 1.8 per cent treading water.

Richard Hunter, head of equities at the stockbroker Hargreaves Lansdown, said: “New offerings may be showing modest gains but the key here is relative outperformance. The wider FTSE 100 is down 5 per cent this year and it’s a completely different story to the situation earlier this year when we were getting close to all-time highs. Sentiment has shifted.”

The best performer on Aim so far is the biotech company 4D Pharma, whose shares have more than trebled and market value has swollen to £171m. The worst performer was Bagir, which makes own-label suits for the likes of Marks & Spencer. Shares in the company were torpedoed by a disastrous profit warning just weeks after the float.