Newly-listed firms beat the FTSE index

Marion Dakers

ANIES that entered the London stock market this year have outperformed the FTSE 100 by more than 16 percentage points, research out yesterday showed.

Newly-listed firms have gained an average of 19.5 per cent on their share price in the year to date, compared to a 3.4 per cent rise in the FTSE 100 and a 7.4 per cent rise on the FTSE 250, according to professional services firm Deloitte.

Eleven companies listed on the stock exchange this year, excluding cash shells, investment companies and venture capital trusts, and eight of those have outperformed the FTSE 100.

An example of this success is Betfair, which completed its initial public offering (IPO) in October with a valuation of £1.4bn. Its shares are now trading more than 10 per cent above the £13 float price.

Companies that have fared less well include Ocado, whose initial public offering in June was plagued by criticism of the firm’s business model. The shares, which were reduced from 275p to 180p ahead of the float, are trading at 132.6p, more than 26 below the original pricing.

Santander and Flybe are said to be lining up to float on the UK stock market in the next twelve months.

John Hammond, capital markets partner at Deloitte, said: “Although there have been winners and losers in the IPO stakes, on average IPOs have done better than putting your money into a tracker fund.”

Hammond said trading conditions this year have made it hard for new companies to join the market, with many cutting back their original valuations.

“Nevertheless, we expect to see a continuation of IPOs in the final two months of this year and into 2011,” he said.

“Investors will continue to be choosey and very aggressive on valuations so companies will have to accept that valuations will be subdued. On the flip side, that may mean further relative gains for investors.”