Bottom Line: Investors get paid just in time for floats
OVER the course of the next few weeks, Vodafone shareholders will receive nearly £15bn in cash and £37bn in Verizon shares as a result of the group’s decision to sell its stake in Verizon Wireless last year.
What perfect timing that appears to be for an ever growing list of companies wishing to raise money on the international capital markets through new listings.
In the past couple of days, companies such as Pets at Home, King, Poundland and Danish outsourcing group ISS have all expressed a desire to raise new money from investors, while a variety of existing investors take the opportunity to sell down or out altogether. So will shareholders use all the proceeds from the Vodafone transaction for these new ventures? Pretty unlikely. Although happier now than they were three years ago or so, European investors are still somewhat wary of the new issues market.
How many of those institutions, for example, who followed JP Morgan’s journey to market with Essar Energy or Bumi (two of the worst floats of recent years) will decide to give Poundland, where the bank is joint sponsor and joint global co-ordinator, a miss? There are other issues, like Tinkoff CS, that haven’t been a roaring success.
Many investors will plump to use the proceeds to back well-established companies like HSBC, BP and GlaxoSmithKline instead. But some of the new money will filter through to new issues and many of them will succeed. As long as sponsors don’t price too greedily.
david.hellier@cityam.com
@hellierd