Jitters put floats on hold

Continued volatility in global stock markets is putting added pressure on the new issues market, which is already suffering from oversupply.

The glut of new issues coupled with increased investor scepticism has already forced some issues to be abandoned and prices to be scaled back. The recent nervousness in the equity markets has only compounded the problem.

Flotations in the second quarter of the year raised pounds 4.2bn - nearly as much as was raised in the whole of 1995. With share prices threatening to nose dive, many companies are having to reconsider their flotation ambitions.

Investor sentiment was not helped by last week's debut of British Energy, which saw shares in the privatised nuclear power business trade all week at a discount to the issue price.

Allied Carpets was also forced last week to price its shares at the lower end of expectations, and Somerfield, the supermaket chain, cut its offer price on Friday to 160p, down from an indicated range of 180p-190p.

The news was further proof of growing restlessness from the institutions at the tide of new issues that has swept out of corporate finance departments the last few weeks on to institutions' desks. There are concerns that some companies being floated on the Alternative Invesment Market would be better served by securing venture capital rather than conventional equity funding.

Biotech companies are also finding it hard to place their shares. British Biotechnology only secured a 49 per cent take-up on its pounds 143m rights issue. Another biotech business, Cambrio Group, has postponed its plan-ned flotation until the end of July.

Among other big deals are in the pipeline, the Bank of Scotland has finished a two-week stint talking to investors around the world, as Standard Life prepares to offload its 29 per cent stake, worth some pounds 800m. The bookbuilding for the placing kicks off tomorrow, and a pricing will be finalised on Wednesday evening.