Cinven rejected calls for higher price for float

David Hellier
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CINVEN, the private equity group, resisted suggestions to price the flotation of Partnership Assurance, the specialist insurer, at the top of the range earlier this month.

Its decision is being hailed in some quarters as indicative of a shift in emphasis towards more responsible pricing by private equity groups when floating companies on the London market.

The market for initial public offerings (IPOs) virtually came to a halt last year with trust between buyers and sellers of assets sinking to an all-time low.

Many investors blamed private equity owners, whom they felt were being greedy when selling out of the groups they held controlling stakes in.

Flotations from a number of companies, including Ocado, Promethean World and Betfair, proved poor value for many investors.

Partnership priced its offer close to the top of the £3.70 to £4.00 range at 385p, giving a valuation of £1.54bn. Some say there was sufficient demand from potential investors to have priced the issue at £4.00 or even to have increased the price range at the higher end.

But, according to those familiar with the deal, Cinven, which sold around 34 per cent of its near 80 per cent shareholding in the deal, argued for a modest price with a view to establishing a high quality shareholder base and a healthy aftermarket.

Partnership shares have been trading strongly since the flotation and yesterday closed at 445p, well up on the offer price.

Under the terms of the deal funds managed by Cinven are locked in as shareholders for 180 days since the first day of trading on the market.

Cinven has a record of only partially selling out at the flotation stage, which gives it a special interest in looking after the share trading in a stock in the months following a public issue.

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