After Saga and Toys R Us fiascos calls grow for IPO markets shake-up

first_img Tim Wallace  Banks and investors are calling on the City watchdog to probe the behaviour of independent advisers on stock market flotations, fearing the initial public offerings (IPO) market in Europe could become dysfunctional. They argue that advisers are distorting the market by putting pressure on banks’ analysts to put an unrealistically high price on the stock. While most newly floated shares have risen this year, a significant minority have performed poorly, and banks fear institutional investors will cut them out, instead going straight to the firms to buy stock. It comes as US regulators close in on a decision over claims a series of banks put pressure on their own analysts to push up the target price in Toys R Us’ attempted float, in a bid to win a role working on the flotation. The US Financial Industry Reg­ulatory Authority (Finra) is looking into claims that analysts and dealmakers at banks are not fully independent from one another. Analysts are supposed to present unbiased research to the firms, so they can decide how best to proceed with IPOs. In the UK, the Financial Con­duct Authority (FCA) has been more concerned with the allocation of shares in floats, rather than the way roles are allocated. Banks that worked on Toys R Us’ failed float face claims they pressured analysts to put too high a price on the stock “We’re hoping the regulators take a lot of interest in this,” said a leading flotation banker in London  “There have been too many failed IPOs in Europe and whatever happens in the US is bound to affect the way we do things here.” “The European system is not working well. The emphasis is on selling at the highest price… but if we [the banks] aren’t careful we risk being disintermediated with institutions buying stakes directly off companies because they no longer trust the process.” In the UK, the flotation of Saga earlier this year created a controversy when the company and its advisers tried to position the business as a consumer brand when many thought it fitted more in the insurance sector, where it would be less highly valued. Saga’s shares are now trading at 156p, down from a float price of 185p – a fall which also hit the 200,000 retail investors in the stock. A series of other poorly performing floats has raised questions about the quality of research on the deals. Pets at Home floated at 245p this year and is down to 203p. AO World floated at 285p in February, rocketing at first before slumping. Yesterday the stock closed at 206.5p. Industry sources close to independent advisers argue that their role is misrepresented by the banks. “Independent advisers don’t carry out valuations or price or allocate deals,” said one insider. “The banks’ corporate finance teams make recommendations about how to represent the investment story to investors, they write the prospectus, they do the due diligence, they do the analyst presentations.” The FCA is running a consultation on the operation of wholesale markets, and is expected to set out any likely market investigations in early 2015.   More From Our Partners Russell Wilson, AOC among many voicing support for Naomi Osakacbsnews.comKiller drone ‘hunted down a human target’ without being told tonypost.comBrave 7-Year-old Boy Swims an Hour to Rescue His Dad and Little Sistergoodnewsnetwork.orgFlorida woman allegedly crashes children’s birthday party, rapes teennypost.comAstounding Fossil Discovery in California After Man Looks Closelygoodnewsnetwork.orgBiden received funds from top Russia lobbyist before Nord Stream 2 giveawaynypost.comPolice Capture Elusive Tiger Poacher After 20 Years of Pursuing the Huntergoodnewsnetwork.orgA ProPublica investigation has caused outrage in the U.S. this weekvaluewalk.comNative American Tribe Gets Back Sacred Island Taken 160 Years Agogoodnewsnetwork.org After Saga and Toys R Us fiascos calls grow for IPO markets shake-up whatsapp Tuesday 18 November 2014 8:56 pmcenter_img Show Comments ▼ whatsapp by Taboolaby TaboolaSponsored LinksSponsored LinksPromoted LinksPromoted LinksYou May LikeMaternity WeekA Letter From The Devil Written By A Possessed Nun In 1676 Has Been TranslatedMaternity WeekEquity MirrorThey Drained Niagara Falls — They Weren’t Prepared For This Sickening DiscoveryEquity MirrorNational Penny For Seniors7 Discounts Seniors Only Get If They AskNational Penny For SeniorsLoan Insurance WealthDolly Parton, 74, Takes off Makeup, Leaves Us With No WordsLoan Insurance WealthPast Factory4 Sisters Take The Same Picture For 40 Years. Don’t Cry When You See The Last One!Past FactoryPost FunKate & Meghan Are Very Different Mothers, These Photos Prove ItPost FunThe No Cost Solar ProgramGet Paid To Install Solar + Tesla Battery For No Cost At Install and Save Thousands.The No Cost Solar ProgramLiver Health1 Bite of This Melts Belly And Arm Fat (Take Before Bed)Liver HealthDefinitionThe Most Famous Movie Filmed In Every U.S. StateDefinition Share Tags: Company IPOs Sagalast_img

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