esure new issue - worth a punt?

Wobblydeb

How can you decide when the price is not set? Genuine question for you good folks.

240-310 is a massive range, and the price is not even guaranteed to be within that range.

To my mind you are not punting on Esure, you are punting on a discussion between the existing shareholders, Deutsche Bank and JP Morgan Cazenove. The result of your punt will be determined by how greedy and good at negotiating each of those parties are.

I haven't participated in an IPO before however, so willing to be set straight by those more knowledgeable than me.

Browntrout_2

gozomark wrote: »

what will you do if it doesn't go up 10% ?

I'd take the hit, sell and move on, probably before the end of the month, it is a gamble but going straight into the FTSE250 means it has to be bought by many funds.

It is in the sellers interest to make sure they price it fairly and that usually means a small initial profit on first day of trading, the 240/310 window allows them to do exactly that I hope, still a gamble though, all single company purchases are, the majority of my investments are with active funds, and that's where I'll re-invest the proceeds here.

Nicholas-bloody-Parsons

Profits driven up 46% last year, which sounds like good growth, but they appear to have been puffed up for the IPO, as it was running at a loss three years ago.

Bizarrely tax payer owned Lloyds sold their 70% stake for £190m in 2010, for the equivalent of about 90p a share. So they are missing out on approx £700m had they held on for 3 years.

srcandas

Nicholas-bloody-Parsons wrote: »

Bizarrely tax payer owned Lloyds sold their 70% stake for £190m in 2010, for the equivalent of about 90p a share. So they are missing out on approx £700m had they held on for 3 years.

You've sealed it for me. Lloyds management assessed it and thought it wasn't worth holding. That makes it a red hot growth share :rotfl:

Webblydeb no one gains by a failure. And the key shareholders are tied in (unable to sell) for either 6 months or a year. But yeah it's a gamble like everything else :cool:

pjala

IPO's seem to be a situation - perhaps the only one where you are spending a lot of money - where you put in a lot of money to buy something ( a share of a company ), and don't get told how much of the company you have bought until it is too late.
Usually a purchase is a negotiation, but not in an IPO - for the small players.

It might be an idea to wait until after the IPO to buy on the open market - you are banking for the IPO on the share price being set below the actual value of the company. Why would the sellers do this?

Biggles

pjala wrote: »

you are banking for the IPO on the share price being set below the actual value of the company. Why would the sellers do this?

Because the main aim is to attract the full amount of cash from institutional investors.

Robie

I have gone for it.

Let's see if it pays dividend.

Biggles

Robie wrote: »

Let's see if it pays dividend.

If that matters to you, you perhaps should have read the prospectus. It says they will.

Robie

Biggles wrote: »

If that matters to you, you perhaps should have read the prospectus. It says they will.

It was play on words.
I meant it as hope it goes up in value so that I can make some money.

Nicholas-bloody-Parsons

pjala wrote: »

It might be an idea to wait until after the IPO to buy on the open market - you are banking for the IPO on the share price being set below the actual value of the company. Why would the sellers do this?

Nothing is guaranteed. The advantages of participating in this IPO appear to be:-
1. There are no dealing costs or stamp duty to pay; so you immediately save 0.5% or possibly up to 1% depending on how much you get.
2. It will be immediately included in FTSE250, so tracking funds are forced to buy.
3.They have up to £500M worth of shares to shift in one go; so will need to price attractively.
4. If it is priced too high, then punters will not participate in future IPOs
5. Existing share holders cannot sell any more shares for at least 6 months.