IPO market shaken as second firm quits

Steve Dinneen
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The IPO market suffered another blow yesterday when Merlin Entertainments postponed its £2bn flotation.

The industry was still reeling from the withdrawal of Travelport’s £2bn listing on Tuesday after it failed to secure enough subscriptions.

The developments rocked the hopes of a string of firms planning to list in the coming months.
Analysts say furniture retailer DFS and fashion chain Supergroup are now unlikely to go ahead with public listings.

High street chain New Look says it will push ahead with its proposed £1.6bn flotation but analysts are skeptical it can achieve its desired valuation. It is seeking to raise £650m in an IPO at the beginning of March.

It will present its prospectus on Monday and begin a management roadshow next week in a bid to drum up support.

Online grocer Ocado remains bullish about its upcoming listing and analysts say it is in a relatively strong position.

The IPO market in the US has also struggled to capture the imagination of investors. Nine out of 10 companies to complete IPOs so far this year were forced to lower their valuations. Spanish IT firm Amadeus is said to be weighing up whether to continue with a planned flotation.

Before scrapping its listing, Travelport had already slashed its price from the 210p to 290p range to 180p to 190p but still failed to impress investors. Theme-park operator Merlin and Travelport are
both owned by private equity vehicle Blackstone.

Analyst Neil Shah, from Edison Investment Research, says Travelport and Merlin could cast a shadow over the market for months to come. He said: “What has happened over the last few days is setting expectations. IPOs are hard work at the moment.

“The market is volatile and investors will not hesitate to knock down an IPO if they don’t see value.”