Newspaper article The Evening Standard (London, England)

Why These Pulled Floats Are No Reason to Get That Sinking Feeling

Newspaper article The Evening Standard (London, England)

Why These Pulled Floats Are No Reason to Get That Sinking Feeling

Article excerpt

Byline: Simon English

THERE'S a crisis in the market. A buyer's strike. It's disorderly. Disastrous. Dangerous. Thusly were we spun on Friday when two chunky floats were pulled at the last minute.

Ready-meals giant Bakkavor and mobile-masts maker Arqiva both reverse-ferreted on plans to join the stock market, citing "volatility" and other excuses. There's no evidence at all that the two co-ordinated their announcements to make their stories more plausible, but neither can have been unhappy to see the other's news.

Lest anyone get the idea that the bankers involved -- the usual cadre of JPMorgans and Goldman Sachses -- simply made a hash of it, we were assured that there had been sufficient demand from investors to get the floats away. The concern was simply that there might not have been enough appetite for the stock to ensure orderly trading after the float.

None of this particularly makes any sense. City traders have been comupwards plaining for some years now not of too much market volatility, but of not enough. They want mad flurries of activity to keep commissions high, but aren't getting them. The FTSE 100, the 250 and the Dow Jones moving serenely doesn't suggest volatile investor reaction. Complacency, possibly. The most likely explanation for the pulled floats must be that investors didn't like the look of the companies very much; at least not at the price being pushed by the bankers. This isn't a crisis in any sense; it's a result, a sign that fund managers have been legged over once too often and have started to rebel.

Funds tend to operate in lock-step with each other. If the others are buying, we had better do so to make sure we don't miss out, they reason. If others aren't buying, they might know something we don't, so we'll sit it out too. If, at the moment, that group behaviour tends to leave foreign-owned firms with slightly curious backstories out of favour when trying to raise money, no one should think that's a sign that the City of London has lost its touch.

The strong impression left from everyone I asked about these floats was that good companies at sensible prices can easily get away. …

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