THE WELCOME GIVEN to HMV - jointly sold by record company
EMI and private-equity firm Advent - when it was floated on the
London Stock Exchange in late April was muted to say the least. The
£537 million issue was priced at 192p from a range of 220p to 190p
yet still traded down in the after market, falling 7.6% on the
first day of trading to 169p on May 27.
HMV's uninspiring performance helped set a dangerous precedent. It
fuelled the belief that new issues trade down in current market
conditions, so creating a strong disincentive to buy in at the IPO
stage. What's the point, reason investors, when you can pick up the
shares much more cheaply a couple of weeks after the launch?
It didn't much help HMV's cause that just days before it priced,
the Copenhagen Stock Exchange IPO of LM Glasfiber had to be pulled.
"The discount the...
