Saga prices shares at the bottom of its range as Travelex talks to a private buyer

IPO WATCH: Companies are still queueing up to float, but pricing is becoming more subdued and some are changing their minds about going public.

by Rachel Savage
Last Updated: 06 Jun 2014

A couple of months ago everyone and their mum was queueing up to IPO, but a mixed bag of floats, including online retailer AO World and mobile takeaway service Just Eat trading well below their champagne-esque offer prices, has made investors suspicious and businesses more cautious.

That frostier sentiment was confirmed by Saga floating at the very bottom of its projected range today and Travelex schmoozing a potential private buyer after mooting a public listing.

There is still a gaggle of companies keen to raise cash on the stock market: property website Zoopla finally announced its long-rumoured IPO yesterday, along with value retailer B&M Bargains and low-cost airline Wizz Air.

Moreover, EasyJet’s sister brand EasyHotel, still majority-owned by EasyGroup founder Stelios Haji-Ioannou, said today it’s planning to raise £60m on London’s AIM market. Unsurprisingly, Stelios, who has experienced his ups and downs with the publicly listed model (cf EasyJet), didn’t spill the beans on what proportion of his stake would be sold.

However, Fat Face pulled its planned flotation yesterday, blaming ‘current equity market conditions’, while National Accident Helpline said it would be raising £82.3m in its float, below its initial target of £100m.

Meanwhile, Saga started trading today at 185p, valuing it at around £2bn, right at the bottom of its 185-245p range. Although the price ticked up to 187p in conditional trading this morning, the over-50s insurer and cruise group had failed to garner enough interest in its shares to price them higher.

Its private equity owners Permira, Charterhouse and CVC also abandoned plans to sell down their stakes at a price which ‘significantly undervalues’ the company. Not the happiest way to start out life as a public company.

Travelex seems to be having second thoughts, after the rash of recent tumultuous listings. The currency exchange company, majority owned by private equity group Apax, is in talks with Bavaguthu Shetty, who owns Middle Eastern fx firm UAE Exchange and is chief exec of London-listed hospital group NMC Healthcare.

A deal would value Travelex at £800m-£1bn, around what it hoped to raise from an IPO, according to the Telegraph. If the talks collapse though, the fx company still has Goldman Sachs and Rothschild at the ready to sort out a public listing, as Apax looks to shift the stake it bought back in 2005.

None of this means that floating is a terrible idea for all businesses, and Lloyds hive-off TSB is very much still on for its own IPO next month. However, after companies from Poundland to Pets at Home piled over-enthusiastically onto the stock market, those with something to gain or lose from flotations will be assessing their options more carefully. Time to put away the bubbly.

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