Bottom Line: Don’t get overexcited at the first signs of life

 
Michael Bow
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THERE’S two ways to look at London’s initial public offering (IPO) market in light of the torrent of floats (about 15 at the last count) coming to market. One, that this is the natural release of pent up demand as market sentiment improves. Or two, that slightly frothy markets have got everyone a bit too over excited.

On the evidence of a rumoured £1bn price tag attached to a Zoopla float – still very much an estimated figure at this stage– the latter looks a more accurate description.

As some quarters have noted, the property website makes profits of about £20m, making its valuation around 50 times earnings, a huge multiple. And while speculation on Zoopla’s valuation bears some relation to the overheated property market itself, the variety of forthcoming IPO pipeline – from postal service Royal Mail to insurer Saga –suggest a broader bullishness.

With stock markets nudging decade-long highs and summer M&A deal activity hinting at a busy autumn the city looks re-energised. But the ultra-bullish sentiment could do with a healthy bout of scepticism to dampen the frenzy. The rush to market is a good thing, but it needs to be tempered with more realism and caution. Recent floats have been successful because of they were cautious. Partnership priced at 385p and closed Friday at 425p; Countrywide priced at 350p and last closed at 540p. If Zoopla does go to market in future it should do so in a conservative fashion. Like the old adage about emerging market investing – that it’s time to sell when you arrive in the country and find limousines waiting to ferry bankers to five star hotels – such rumoured IPO valuations should ring alarm bells.

ADVISERS ZOOPLA

GILLIAN SHELDON
CREDIT SUISSE

ZOOPLA has hired the experts at Credit Suisse to help explore future options for the company.

Heading the Credit Suisse team is senior banker Gillian Sheldon, who is a managing director in the bank’s investment banking division based in London.

Sheldon currently advises on a raft of corporate finance dealings across the media, publishing and technology sectors. Sheldon, a mathematics graduate from the University of Bristol, joined Credit Suisse First Boston (as it was then) in 1998 from BZW following the formers acquisition of the latter in 1997.

Before BZW, Sheldon spent seven years within the corporate finance division of N M Rothschild & Sons in London, working on government privatisations.

Outside of Credit Suisse, she is a senior independent director of Capita having been appointed at the start of this year.

As a non-executive director, Sheldon sits on company’s audit committee, remuneration committee and nominations committee.

In September 2012 she was appointed trustee of BBC Children in Need.

She has previously been chair of Bird & Co Group Advisory Board. She also served on the Credit Suisse Charity Committee for Charity in 2006-07.