We’re calling the end of the rock’n’roll IPO: no more champagne-swilling, crazily-priced flotations. From now on, we’re going to see solid, dependable listings from solid, dependable companies more worried about their long-term share performance than how many dozens of multiples they’re valued at on IPO day.
Hmm. Perhaps not - but still, Zoopla made its stock market debut today, and, having priced its shares at the lower end of its range at 220p, for once, things have gone rather well.
Investors voiced their approval at its pricing by sending shares above 237p (that’s nearly 8% up) on opening, before they dropped back to just over 229p in mid-morning trading. Still, that temporarily put its value at £1bn.
Source: FE Investegate
Presumably there are celebrations at DMGT (its biggest shareholder) HQ this morning - its 52% stake is now worth £478m. Founder Alex Chesterman, meanwhile, made £32m when he sold just under half his 8% stake for £32m.
It’s a stark contrast to some of the more, er, exuberant listings which have taken place lately. Lest we forget, the share prices of Pets at Home, Just Eat and Card Factory - to name but a few - all dropped on their market debut. Zoopla’s management has obviously learned from that and opted for a softly, softly approach.
It probably helps that the company offered a 20% discount on shares to estate agents (ie. its clients): apparently one in five took the opportunity to buy shares. That’s a pretty savvy move by Zoopla, considering recent complaints about its pricing structure. Now they have an interest in its profit margins.
Nevertheless, as with all these situations, what’s important is the long-term share price. Judging by Zoopla’s performance today, it shouldn’t be much of a worry. Easy does it.