Bottom Line: New players have a better chance than most

 
Elizabeth Fournier

IT’S A tough one to call. At the same moment that Fat Face officially pulled its market listing, four other companies filed upbeat intentions to float – each convinced that they had the perfect formula that would have investors running for the shares.

Despite the fickle market, some of them might actually be right. Zoopla has ridden the property boom all the way to the stock exchange, and now advertises 90 per cent of all residential property listings, with operating profits that have grown by 15 per cent in the last six months.

Similar property flotations bode well for its chances. Foxtons, which debuted at 230p last September, now trades about 300p, while Rightmove – a market member since 2006 – is worth six times its float price, despite weathering a huge house price crash.

B&M Retail is also tapping into a growing sector. Discount supermarkets are gobbling market share from traditional retailers – Aldi’s market share grew a record 36.1 per cent in the year to April – while fellow bargain-peddler Poundland is one of the few retailer IPOs of 2014 still trading at a healthy premium to its listing price.

River and Mercantile, a pensions adviser, and budget airline Wizz are less safe bets. And of course investors could simply get weary of the slew of new shares on the conveyor belt, and decide to take a step back.

They shouldn’t be too hasty. Although a rush to market can make things look risky and cluttered, there are still gems to be found among the rabble.

Related articles