Scottish vote puts temporary brake on British share issues

September 10, 2014

By Freya Berry

LONDON (Reuters) – Bankers are advising companies planning London stock market listings to avoid launching them in the run-up to next week’s Scottish independence vote or immediately after it, because of the potential for market volatility.

Investors are watching the Sept. 18 referendum with renewed interest after a weekend opinion poll showed the “Yes” camp -representing those in favour of independence – with a narrow lead.

“There’s certainly a wait-and-see approach for the next eight days. People are nervous. Because the poll was so sudden they have been reassessing their risk appetite,” said Adam Gishen, a partner at advisory firm Ondra Partners.

“What we’ve been seeing is a couple of start dates for IPO roadshows being pushed back.”

With deals like initial public offerings (IPOs) and secondary share sales particularly sensitive to market conditions, one senior ECM banker at a major firm said they were advising clients not to launch either on Sept. 18 or 19 because of the potential impact the poll could have on currency and stock markets.

No British companies have announced their intention to float since the summer – a late start after the summer break compared to last year, when Foxtons was announced on August 27 – although bankers say there are two or three offers planned for next week.

“I was expecting a couple this week but I think people are just holding off. If it’s a good company you don’t need to rush it out the door,” one broker, who declined to be named, said.

“If you look at the standard two-plus-two timetable you really don’t want to be bookbuilding at this time,” the broker added, referring to the two weeks of roadshows and two weeks of bookbuilding that usually follow an official announcement of an “intention to float”.


Concerns over the vote come at a time when companies already face stiff competition for investor attention, with stock market listing proceeds quadrupling to $55.5 billion (34.39 billion British pounds) so far in 2014 against the same period last year.

UK retailer DFS, British Car Auctions [BCRAU.UL] and lenders Aldermore [IPO-ALDE.L] and Virgin Money [IPO-VMH.L] are among those tipped to list this year.

Bankers said that the Scottish referendum had not yet caused major worries for firms seeking to float.

But they added that companies with UK-centred operations, particularly those holding Scottish mortgages or loans such as Aldermore and Virgin Money, could face depressed valuations due to uncertainty over future earnings and outlook.

Aldermore and Virgin Money declined to comment.

Bankers also said the government’s sale of the next tranche of Lloyds shares could be affected. The sale could go ahead in September if there is a No vote and a positive share reaction, a banking industry source said, but would be postponed for some time in the event of a break-up

Lloyds and UK Financial Investments, the body that manages the government’s 25 percent stake in Lloyds, declined to comment.

“There are all these things that nobody knows,” a banker said. “It’s very hard to value a company in these conditions.”

(Additional reporting by Alexander Smith and Matt Scuffham; Editing by Elaine Hardcastle)

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  • Scottish independence vote

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