The frosting's come off the IPO market after Patisserie Valerie priced its shares at 170p

IPO WATCH: The chain, best known for its posh cream cakes, has priced its shares at the bottom of their range. But, given what's happened to rivals, it seems like a sensible choice.

by Emma Haslett
Last Updated: 14 May 2014

The froth – or, rather, the frosting – has come off the top of the IPO market after Patisserie Valerie chose to price itself at the very bottom of its 170p-200p price range when it debuts on the AIM market (brilliantly, it’s trading under the ticker ‘CAKE’).

Obviously it isn’t great news for the company (and backer/MT columnist/veteran entrepreneur Luke Johnson) because it will raise less than it had planned. But it does suggest it’s taken note of what’s happened to other high street chains and major retailers (Poundland, Pets at Home, AO World) which have IPOd lately and not fared brilliantly. So it’s a sensible approach, even if it isn’t the most desirable outcome. And Johnson should know: he's presided over several IPOs in the past, including that of Pizza Express.

Still: that price means the company will raise £32.8m, and in conditional trading between City institutions yesterday, shares rose 7% to 183p, giving the company a value of £183m. Based on the lower end of the pricing, Johnson’s 42.7% stake is worth about £73m. So this is by no means a disaster.

Johnson, who is also the chain’s executive chairman, said the listing will ‘mark a key step in the development of the group. We have grown the business from eight stores to 138 today, and I’m delighted that our new investors have recognised the potential to roll out Patisserie Valerie further’.

The chain, which also owns Druckers Vienna Patisserie, Philpotts, Baker & Spice and Flour Power City Bakery, will IPO properly on Monday – so we’ll have to wait until then to see whether it’s cream cakes all round, or a stale crust for Johnson.

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Finance Retail

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