Cenkos Securities, the UK stockbroker headed by Andy Stewart, soared on its stock market debut in London on Tuesday, as investors piled in on hopes that Mr Stewart would recreate the success he had when he co-founded Collins Stewart in the 1990s.
Shares in Aim-listed Cenkos jumped from a placing price of 140.5p to 201.5p, valuing the business at £146m ($278m), including B shares issued to staff.
However, NewSmith Capital Partners, which backed Mr Stewart when he started the company 18 months ago, missed out on the first day gain, having sold its entire 16 per cent stake in the listing.
No other stakeholders sold shares in the flotation.
NewSmith, the investment vehicle set up by former Merrill Lynch bankers, including Paul Roy and Michael Marks, still banked a ten-fold profit on its original £1.5m investment in Cenkos.
“Am I disappointed we sold? No,” said Mr Roy. “We had an agreement with Andy to help facilitate a listing of Cenkos and we have done that.”
“If we had decided to retain some of our stake we would have been locked up until March 2008,” said Mr Roy, who will remain a non-executive director of Cenkos.
Aside from 11.25m shares sold by NewSmith, a further 1.78m shares were placed on behalf of Cenkos, bringing in around £2.5m to cover flotation costs.
The stock was placed with over a dozen institutions and private clients of Cenkos’ wealth management business.
Following the flotation, Cenkos will be largely owned by its staff, with Mr Stewart the biggest individual shareholder with 23.8 per cent.
Employees will be allowed to sell half of their shareholdings in 18 months and the remainder a year later.
Mr Stewart said he was delighted by Cenkos’ strong debut and was not concerned that the Aim market was suffering from declining investor appetite for initial public offerings.
Sector watchers said Cenkos shares had been attractively priced to motivate staff. According to the flotation prospectus some share option awards and incentive schemes have been pegged at Tuesday’s flotation price.
A person familiar with the situation said the 140.5p price put Cenkos on a multiple of about 8 times next year’s earnings. Analysts have not yet made earnings forecasts for Cenkos. Most other brokers in the sector trade between 11.7 times and 12.8 times 2007 earnings.
In the first half of this year, pro forma operating profits at Cenkos were £9.3m on revenues of £19.5m.