"Brexit is taking a bite" out of British initial public offerings, say Elaine He and Chris Hughes on Bloomberg Gadfly. "Rubbish collector Biffa and software group Misys are the latest victims." This week, Biffa, which aimed to raise £250m-£300m by floating on the London Stock Exchange, slashed its offer price to 180p per share, from an initial range of 220p to 270p a share.
Misys was aiming for an IPO that would value the company at £4.5bn, making it the UK's biggest tech company flotation. Now it is expected to cut that by £1bn, and has asked the UK Listing Authority for permission to float just 20% of the company rather than the usual 25%.
Other firms have abandoned floats altogether. Last week, Pure Gym ditched its plans for a £190m listing due to "weak investor enthusiasm", says Angela Monaghan in The Guardian. Car-parts maker TI Fluid Systems has done the same with its €600m float, citing tough market conditions.
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Listings were already down on last year, say Lauren Fedor and Nathalie Thomas in the Financial Times. "Relative calm in the market after the referendum persuaded some bankers to schedule a number of listings this autumn."
But growing talk of a "hard Brexit" could "damp investor sentiment and delay further dealmaking". IPOs need not dry up completely: "there's a price at which almost any deal can get done", say He and Hughes. But "that price is coming down".
Shares in Drax, the owner of the country's biggest coal-fired power station, jumped almost 10% on hopes that the EU is about to approve the UK's state aid for the conversion of part of the plant to generate electricity by burning wood pellets "biomass" instead of coal. In addition, Credit Suisse says Drax is the "clearest beneficiary" of the volatility and scarcity of Britain's power generation.
Man Group +9.4%
There was a triple-whammy of good news from Man Group, the world's largest listed hedge fund, this week. It announced a 6% rise in funds under management in the third quarter, up from $74.6bn to $80.7bn; the $25m acquisition of US real-estate manager Aalto Invest, which has more than $1.7bn under investment; and it said it is to buy back $100m of shares over the next year.
Luxury goods maker Burberry saw shares slide this week despite a "robust performance" in the six months to the end of September including a 30% jump in underlying UK sales, as tourists took advantage of the weaker pound. Total revenue was unchanged at £1.1bn, with like-for-like retail sales up by 2%. But wholesale sales slid by 14%, and the company expects "a similar second half" to the year.
Shares in educational publisher Pearson have taken a beating after the company reported weaker sales in a "challenging" market. Underlying sales fell 7%, driven by lower exam-assessment revenues in the UK and US, and declining demand for higher education textbooks in the US. It said forecast profits remain unchanged due to a "tight focus on discretionary costs", but that didn't stop investors selling the stock.
Ben studied modern languages at London University's Queen Mary College. After dabbling unhappily in local government finance for a while, he went to work for The Scotsman newspaper in Edinburgh. The launch of the paper's website, scotsman.com, in the early years of the dotcom craze, saw Ben move online to manage the Business and Motors channels before becoming deputy editor with responsibility for all aspects of online production for The Scotsman, Scotland on Sunday and the Edinburgh Evening News websites, along with the papers' Edinburgh Festivals website.
Ben joined MoneyWeek as website editor in 2008, just as the Great Financial Crisis was brewing. He has written extensively for the website and magazine, with a particular emphasis on alternative finance and fintech, including blockchain and bitcoin. As an early adopter of bitcoin, Ben bought when the price was under $200, but went on to spend it all on foolish fripperies.
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