Freeserve's Historic IPO: A New Benchmark for European Internet Companies

Strategic Insights -

Freeserve, the UK's largest internet service provider, has kicked off its highly anticipated Initial Public Offering (IPO), with shares priced at 150p. The company, spun out of Dixons retail group, is valued at £1.5 billion, despite being loss-making and having a short track record. The flotation has been more than 20 times subscribed, driven by retail and institutional investors' appetite for exposure to the new media market. With 1.32 million active users and a formation date of nine months ago, Freeserve is poised to become Europe's largest quoted pure internet company.

Key Takeaways:

  • The IPO has been more than 20 times subscribed, exceeding expectations and establishing Freeserve as a highly sought-after investment opportunity.
  • The company's valuation of £1.5 billion is a testament to its growth potential and demand for new media companies.
  • Freeserve's shares are expected to leap to a premium of more than 30% after the flotation, with prices previously quoted on the grey market ranging from 209p to 216p.
  • The flotation will raise £264m to be divided between Dixons and Freeserve, with Director John Pluthero expected to use the proceeds to acquire exclusive content for the network.
  • Energis, a UK quoted internet and telecoms group, has purchased 1.75% of the 20% shares being made available in the IPO.

Statistics:

  • 1.32 million: The number of active users on Freeserve's network.
  • 9 months: The length of time Freeserve has been in operation.
  • £1.5 billion: The valuation of Freeserve in the IPO.
  • 150p: The offer price of Freeserve's shares in the IPO.
  • £264m: The projected amount of funds raised through the flotation.
  • 20%: The proportion of shares being made available in the IPO.
  • 1.75%: The proportion of shares purchased by Energis in the IPO.
  • 30%: The expected premium on Freeserve's shares after the flotation.

Sources:

  • Financial Times Limited, 1999.