SHARES in Just Eat, the online food takeaway group, yesterday finished their first day of trading 23p above an already high issue price, to value a group with underlying earnings of £14m at an astonishing £1.6bn.
When the group first started discussing the possibility of floating earlier this year, the assumption was it would fetch a valuation of between £700m and £900m.
Its valuation increased markedly once the banks started talking to would-be investors about price.
Existing shareholders, including chief executive David Buttress, are selling between £260m and £287m of shares in the offer, giving independent investors a stake in the company of between 24.6 per cent or 26.4 per cent of the group.
Just Eat has become the first member of the London Stock Exchange’s High Growth Segment, introduced more than a year ago to encourage high growth companies to list in London rather than the US.
Under the rules, groups are allowed to have a free float as low as 10 per cent, compared with the 25 per cent requirement for a premium listing. Should Just Eat’s free float go above 25 per cent, it will be asked to apply for a premium listing after all, depriving the High Growth Segment of its only member possibly before others join.
Just Eat’s stunning market debut was too much for some. “Critics will point to its sky-high valuation as evidence that it fits into the theory of the second coming of the tech bubble,” said IG Index’s Will Hedden.