THE biggest stock market flotation in two years was sensationally pulled last night, in a move that will send tremors through the IPO market.
The shock announcement came after the firm had already slashed the price range from 210p to 290p – valuing the company at £2.16bn – to just 180p to 190p. But a lack of subscriptions finally left the deal hamstrung last night.
The company said the decision followed a review of market conditions. Jeff Clarke, Travelport’s chief executive, said: “Since we announced our intention to float, there has been significantly increased volatility and uncertainty in global equity markets, as a result of macro circumstances unrelated to our business.
“We will consider bringing it back to the market at a future date, when equity market conditions are more favourable.”
Majority owner Blackstone had hoped to raise $1.9bn (£1.2bn) from the flotation, allowing it to halve the company’s debt to $1.5bn and cut the private equity vehicle’s stake from 70 to 40 per cent. The collapse will be a double blow for Blackstone, which aimed to set a precedent for a string of flotations planned for later in the year.
The firm will now be left considering whether it can salvage a trade sale in the wake of the collapse.
Analyst Neil Shah, from Edison Investment Research, said the collapse could have serious repercussions for other firms planning IPOs. He said: “Investors are sending a message that IPOs need to be on their terms. There needs to be major incentives for investors or they will take an IPO out. This will send serious tremors around the market. People want to see a healthy market with IPOs getting away – this is not a good sign.”
Analysts say part of the reason for the collapse was a remuneration policy that investors baulked at. Travelport had tweaked a bonus scheme but the policy was still seen as excessive.
The news will be a major blow for a series of big names hoping to float this year. Fashion retailer New Look is set to list for an estimated £1.6bn, rehab clinic The Priory is eyeing a flotation with a market value of around £1.3bn and online grocer Ocado is about to launch a £1.2bn public offering.
Also in the running for IPOs this year are Legoland owners Merlin Entertainments; clothing retailer Supergroup and furniture retailer DFS.
Investment firm Gartmore was forced to slash its listing price in the lead-up to its IPO in December. Its stock has fallen 16 per cent since the $553m listing.