It looks like the Equiniti flotation is being ‘priced to go’ as the IPO price range falls short of expectations. The share registrar and owner of the Selftrade share dealing platform is set to be valued at between £495 million and £600 million. That compares with reports it would be valued at £700 million market cap (excluding £300 million debt) when its IPO was first announced on 2 October.

A spokesperson says the company’s valuation has been set against nearest peer, FTSE 100 outsourcer Capita (CPI), with a discount then applied to reflect Equiniti’s status as a smaller company. Equiniti would just scrape into the FTSE 250 at the lower end of its IPO range if it were on the market today.

The spokesperson adds that the IPO valuation is ‘realistic and pragmatic’ and says it should offer good value in the aftermarket.

One could read into this statement that the IPO has been deliberately priced low in order to get the float away and give investors willing to participate in the offer an instant return when the shares start trading.

This view is purely speculative and investors must never assume they are guaranteed to make a profit when participating in new floats at the IPO offer level.

Equiniti initially said it would try and raise £390 million from the IPO to pay down debt and IPO-related costs.

The new announcement says Equiniti will now raise just £315 million from the IPO and the remaining £75 million will come from private equity owner Advent which will buy new shares.

This is somewhat perplexing given that Advent was expected to use the IPO as a partial exit from its investment. ‘Advent sees significant upside from the shares at the moment,’ says the Equiniti spokesperson.

The shares will start trading on 27 October. Retail investors seeking to take part in the IPO offer must submit their applications by 23 October.


Issue Date: 14 Oct 2015