Bid interest provides tonic for IPO basket case

David Hellier
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WHENEVER the trials and tribulations of the London new issues market are discussed, two companies never seem to be very far away from the centre of the debate.

They are Betfair, the peer to peer betting company at the centre of takeover speculation yesterday, and Ocado, the online groceries group.

Both companies, each advised by Goldman Sachs, were sold to the market on the back of an internet model that supposedly promised rapid growth.

Shares in both, though, have been well down from their issue price, leaving many shareholders disgruntled, with some vowing to stay away from the market altogether.

Yesterday there was a ray of light for Betfair investors as a group of entrepreneurs, led by CVC, expressed an interest in bidding for the company. Shares, which were issued at 1,300p at the time of the IPO in October 2010, moved up 75p to 775p.

Analysts at Numis Securities said the CVC interest could well provide a catalyst for either others to look at Betfair or lead management to take a different strategic route.

The CVC-led group has until 13 May to bid under Takeover Panel rules.

Betfair has a new management team in place, led by Breon Corcoran, and shareholders are best advised to stick with him for the time being.