|British gambling chain William Hill yesterday defied weak stock markets and enjoyed a successful first morning of conditional trading. |
Shares in the company opened at 236.5 pence, a 5% premium on the issue price of 225 pence. But investors quickly pushed the price up to 241p and then to 246.5p at the close.
But few interpreted the London recovery as a fundamental change in sentiment from the nervousness that has characterised the market over the last fortnight. There are fears that the Bank of England will have to raise interest rates to curb consumer spending - an expectation now shared by more than half the public, according to a Bank of England survey.
The success of the William Hill float was put down partly to the continuing deregulation of betting and the growth of online gambling. It was also attributed to attractively low pricing - a 29% discount to the leisure sector and a 48% discount to the FTSE-All Share index.
'[The float is] quite an achievement. It shows that with a decent business and sensible banking there is still interest in new issues,' said Eric More of Gartmore Investment Management.
'We are delighted with the response to the flotation … in what continue to be challenging stock market conditions and we are very pleased that the flotation has been in excess of 10 times over subscribed,' said chief executive David Harding.
To meet greater than expected demand, William Hill's private equity owners, Cinven and CVC Capital Partners, have sold down larger stakes.
The money will be used for cutting some of the bookmaker's £510m debt, but it is hoped over £340 million will also be directed towards expansion - possibly acquisition resulting from the anticipated break-up and auction of Coral's betting shop chain.
At its 225p price tag William Hill has a market value of £949m, and an enterprise value - when adding in debt - of £1.5bn. Its rise yesterday means it is valued at around £1.04bn.
The full listing is on Thursday, when private investors join the institutional investors trading.