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Concern over Scots vote is shaken off as IPOs return [Daily Mail, London](Daily Mail (London, England) Via Acquire Media NewsEdge) Sept. 23--Challenger bank Aldermore's plans to list on the stock market have reignited the float fever that has gripped the City this year. Fears that the Scots may vote for a break-up of the United Kingdom has put a damper on initial public offerings (IPOs) over the past few weeks. But following the 'No' vote last week, the brakes are off again and IPOs worth around pounds sterling 3bn in total are expected this week. Scotland-based property company Miller Group, along with actress Nicole Kidman's favourite shoe-maker Jimmy Choo, motoring rescue services RAC and telecoms group EE are all expected to unveil floats in the coming weeks. The flow of listings in London – and around the world – slowed to a trickle in the financial crisis. But floats are now back with a vengeance as confidence has returned to the markets. Chinese e-commerce company Alibaba, which listed on the New York Stock Exchange last week, won the distinction of becoming the world's biggest ever flotation at $25bn (pounds sterling 15.6bn) after it was swamped by investor demand. In this country, floats have a reputation among small investors for providing instant gratification, in the shape of a first day bounce – largely a legacy of the Thatcher-era privatisations that were directly aimed at 'Sids'. But the current crop has been a mixed bag. While the floats have netted multi-million-pound hauls for entrepreneurs, private equity owners, management teams and advisers, investors in some are nursing big losses. After a shaky start, AA has been one of the best performers this year with its shares up about 16pc since launch. Its former stable mate, Saga, which made a big pitch to attract small shareholders, is still trading below its issue price. White goods retailer AO World has seen its shares fall sharply since its float in February, from an issue price of 285p to just under 195p. Discount retailer B&M, chaired by former Tesco boss Sir Terry Leahy, is down around 5pc since its IPO. Pets At Home, one of the worst performers, is firmly in the doghouse, trading at around 30pc lower than its issue price. Some observers view Pets At Home as another example of the rapacity of private equity owners bringing firms to market. City views on private equity IPOs were soured by the ill-starred float of Debenhams in 2006, which was followed by profit warnings and a plunging share price. Pets At Home was bought four years ago by KKR and has paid out hundreds of millions of pounds in dividends and interest to the US private equity house, amid concerns among investors about the amount of debt taken on. Senior management, including chairman Tony DeNunzio, a senior adviser to KKR, sold millions of pounds worth of shares in the float. But experts said not all private equity offerings should be tarred with the same brush. 'It is not as simple as saying people need to be wary of private equity floats,' said Elaine Coverley, head of equity research at Brewin Dolphin. 'Investors need to look at each case on its individual merits. 'They need to look at the business model, the margins and the competitive drivers, as well as at who is selling and what they are doing with the money. 'If a seller is getting out completely, then that is a warning bell. Performance has diverged hugely. In the past, IPOs were seen as a licence to print money, with the privatisations, but now they are much riskier propositions. 'Even with the Royal Mail there was a quick turn, but the underlying business model is not that strong – you can see that with the most recent results.' Aldermore Bank, which is owned by private equity firm AnaCap, said it is looking to raise about pounds sterling 75m and that the net proceeds will be used to support growth. Hedge funds Lansdowne Partners and Toscafund are expected to increase their holdings through the IPO. It is one of a number of floats in the financial services sector, including OneSavings Bank, TSB and possibly Virgin Money, hoping to cash in on an appetite among investors for 'legacy-free' banks that are not burdened by the bills of past misdeeds. Chief executive Philip Monks believes Aldermore is well positioned to meet the demand for finance among small and medium firms that is not being satisfied by the conventional banks. Despite the mixed performance of firms coming to market, experts reckon there will be a record amount of cash raised this year by companies listing. Around pounds sterling 7.4bn had been mustered by the end of August, according to Capita Asset Services, and if that continues, 2014 could well surpass the previous high water mark of pounds sterling 8.7bn in 2011. The float frenzy is heating up again, but investors should keep a cool head. ___ (c)2014 Daily Mail (London, ) Visit the Daily Mail (London, ) at www.dailymail.co.uk/home/index.html Distributed by MCT Information Services |