From internetnews.com:
internetnews.com
UK's Freeserve Priced at Top of Range July 26, 1999
Business News Archives
Freeserve, Europe's first major Internet flotation, is expected to show a premium of 30 percent to its issue price when trading opens later on Monday, but some analysts have warned that gains might prove
short-lived.
Freeserve's parent company, British electrical retailer Dixons Group Plc which is selling around one-fifth of the group, said the offer would be set at 150p in London and $23.67 in New York. The offer values Freeserve at 1.51 billion pounds ($2.39 billion) and was more than 30 times subscribed.
A scramble for shares is expected to propel the group, whose 35-year-old Chief Executive John Pluthero pioneered subscription-free Internet access, to a premium of around 30 percent when conditional trade begins at 1330 GMT.
Despite some savage analyst reports urging investors to avoid the flotation amid scepticism about the loss-making group's projected revenues, market makers said early indications showed an opening price of between 210 and 215 pence in London.
"We are delighted by the vote of confidence given to Freeserve by so many investors worldwide," said Pluthero, who is set to be turned into paper millionaire after the listing.
"The flotation is another significant step towards our goal of being the UK's home on the Internet," he added.
Freeserve was launched only last September and now has more than 1.3 million subscribers. Its success has spawned a host of rivals offering subscription-free access, ranging from supermarket groups to soccer clubs and now AOL Europe has rival plans.
Freeserve takes revenues from a share of local call charges plus advertising and e-commerce. Analysts have said that a reform of phone tariffs in Britain could undermine the business model, although Freeserve argues this will be offset by higher income from the other two sources.
Charting the company's progress in the next few weeks should be intriguing as some analysts have said the stock is one to avoid once the initial euphoria fades.
Credit Lyonnais Securities said on Monday it was advising clients to "sell" shares based on a price of 210 pence.
Credit Lyonnais IT analyst Peter Wyatt said a comparison with U.S. equivalents suggested a valuation nearer to one pound.
Dixons said over 153 million shares had been allocated to institutional and retail investors as part of the offering. Around 90 million were new shares issued by Freeserve, raising 135 million pounds, and 63 million shares were sold by Dixons.
Freeserve subscribers who applied for the retail offer will receive the number of shares applied for up to a maximum of 500 shares. ($1=.6335 Pound) ($1=.6312 Pound) |
