Why are Companies Struggling to IPO in a Rising Market?

THE WEEK: Morningstar columnist Rodney Hobson asks exactly is supposed to have gone wrong with the market when 3 companies abandon plans to float?

Rodney Hobson 21 October, 2016 | 11:32AM

When stock markets are falling I can quite understand that privately-owned companies and their advisers are nervous about launching an IPO. I do not understand why getting shares away in a buoyant market is so difficult. The implication is that either there is something wrong with the company or the proposed flotation price is simply unrealistic.

Yet complaints about the state of the market have resurfaced of late on the London Stock Exchange despite the surge in share prices since the initial drop following the Brexit vote.

Waste management group Biffa (BIFF) went ahead with its IPO this week but at 180p a share, well below its 220p-270p target range. Biffa announced plans to float a month ago when the FTSE 100 was around 6,800 points. By close of play last Friday, just before Biffa went ahead, the index was at 7,000. The FTSE 250 was just under 18,000 points, about the same as a month earlier.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Ashley (Laura) Holdings PLC  
Biffa PLC170.00 GBX-2.75
Centrica PLC31.84 GBX-6.13

About Author

Rodney Hobson

Rodney Hobson  is a columnist for Morningstar.co.uk and author of several investing books, including The Dividend Investor and How to Build a Share Portfolio.

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