Given that one of the City’s star fund managers said less than three weeks ago that the Saga flotation had “probably killed” the market for further new issues, bankers were mightily relieved yesterday that shares in B&M immediately ticked up nicely in first day trading for the discount retailing group’s shares.
So frayed were nerves in the days following Saga’s entrance on to the stock market that bankers and fund managers might have struggled to sound confident about floating a copper-plated bank, let alone a group of 300 mainly northern England-based stores that sell things such as a Fart Blaster for children at discount prices.
But B&M has always been seen as a well-run company and it appears from initial soundings that this has been a well-run flotation, with a host of bank advisers, including Bank of America Merrill Lynch, Goldman Sachs, Lazard and Rothschild taking the deal happily over the line.
Having narrowed the price range to 260-290p, there must have been a slight temptation to settle on the top of the range. But plumping for 270p gave the stock sufficient momentum yesterday so that it enjoyed the all important so-called pop, which sees it rise above the issue price.
It is worth noting that relations between the banking syndicate and the two independent financial advisers, Lazard and Rothschild, who advised the Arora family, appeared to be good.
That was clearly not the case in the Saga deal, where, as I reported last week, there was considerable tension between the banking syndicate and STJ, the independent financial adviser in that case.
Last week’s column elicited much response from many of the City’s most senior bankers.
One texted me to say: “That was the most sensible article I have read in a while”, while others were more enigmatic, posting messages like “interesting piece”.
When I went to a dinner earlier this week at Tulchan, all the bankers there wanted to speak to me about – off the record, of course – the role of STJ in flotations.
I have offered STJ founder John St John the chance to respond to the criticisms that have been levelled at the firm by bankers, principally that he employs tactics that are divisive and do not ultimately assist the role of pricing a new issue, and I’m awaiting his response.
His external public relations agency has called to say St John is keen to respond to misperceptions that persist in the banking world about his firm. I am more than happy to give him the right to try to do this.