Two new floats sink in choppy IPO waters

In the third quarter, London was the busiest major stockmarket for initial public offerings (IPOs). But this quarter IPOs have hit troubled waters.

Andrew Van Sickle
By Andrew Van Sickle
published

In the third quarter, London was the busiest major stockmarket for initial public offerings (IPOs). But this quarter IPOs have hit troubled waters. Last week two flotations worth a joint $6bn were cancelled. Radio and mobile-phone mast company Arqiva, which had hoped to raise £4.5bn, and Bakkavor, a supplier of fresh foods to supermarkets and sandwich shops, both blamed market uncertainty. Meanwhile, EN+, Russian oligarch Oleg Deripaska's energy and metals conglomerate, priced its flotation at the lower end of the expected range.

Arqiva and Bakkavor "really deserve some kind of medal for limp excuses", says Jeremy Warner in The Sunday Telegraph. Citing market uncertainty at a time when share prices have been hitting new record highs for months is like being a clothing retailer blaming a poor summer season on too much sunshine. It's not hard to see what's really going on here: the flotations' sponsors were just being "too greedy".

Arqiva, which is highly indebted, had just failed to secure a private sale, notes Jim Armitage in the Evening Standard, which means equity investors were being asked to buy something nobody else wanted hardly an especially appealing proposition. Bakkavor, meanwhile, is in a fiercely competitive market and run by two of the "tarnished generation of Icelanders" who almost bankrupted the country. The IPOs failed because "fund managers were being choosy with our pensions".

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Yet there's a price for everything as the EN+ IPO shows, says Warner. "Set it low enough and the investors will come, even for someone with as colourful a reputation as Deripaska".

Andrew Van Sickle
Andrew Van Sickle

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.

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