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EDITIONS
Monday, 1 July, 2002, 09:15 GMT 10:15 UK
UK firms shelve flotation plans
Yell web page
Yell's flotation was expected to raise about 2bn
Two huge London stock market debuts have been pulled because of volatility and investor nerves triggered by the discovery of accounting frauds in the United States.

Yell, the owner of business directory Yellow Pages, said on Monday it was postponing its flotation, which had been expected to raise about 2bn ($3.1bn).

DIY retailer Focus Wickes decided over the weekend to put off a flotation in which it had hoped to raise 1bn.

But the fashion house Burberry has said its planned flotation remains "on track".

Poor market conditions

Focus Wickes said: "This is not the right time to proceed, given the volatility of market conditions.


We are now in a situation where the IPO market has come to a halt

Neil Austin
KPMG Corporate Finance
"Investors are very nervous about committing until they get a clearer view of how the market is going to settle."

The DIY firm had been expected to price its shares at the bottom end of its indicative price range of 230-290 pence per share.

Yell also issued a brief statement saying it was pulling out of its float "in light of poor equity market conditions".

The two giant debuts were being seen as a test of investors' willingness to back new stock market listings.

Stock market debuts have all but dried up during the last year because of the difficult market conditions.

The knock-on effect has been felt across the corporate finance sector, and many big investment banks have cut staff numbers.

"We are now in a situation where the IPO (initial public offering) market has come to a halt," said Neil Austin, head of new issues at KPMG Corporate Finance.

Burberry float 'on track'

The news of the pulled flotations meant attention switched to the UK fashion brand Burberry, which is due to be partially floated later this month by its owner, the retail to business services group GUS.

HMV store
HMV shares made a disappointing debut
But GUS shrugged off any worries that the share offering might have to be cancelled.

"We are letting it be known that our IPO plans remain on track," a spokeswoman said.

Last week the Italian fashion house Prada postponed its flotation for the third time since Spring 2001.

But some analysts believe Burberry's float will succeed.

"Burberry has a scarcity value, as it will be the only listed luxury goods group in the UK," said Nick Bubb, retail analyst at SG Securities.

"It would be surprising if that didn't get away."

Win some, lose some

The main flotations on the London market this year have had mixed fortunes.

Shares in the record store chain HMV have disappointed since floating at 192p in May, and are currently trading at 159.5p.

The pub group Punch Taverns at first scrapped its flotation plans, before eventually going ahead with the share offer at a lower price.

Punch's shares are now trading at 238p, up slightly from its flotation price of 230p.

The betting shop chain William Hill was the most recent flotation, with its shares going on sale at 225p last month.

And despite the recent stock market turbulence its shares have held up well, and are currently trading at 265.5p.

See also:

27 Jun 02 | Business
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13 May 02 | Business
23 May 02 | Business
16 May 02 | Business
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