Gartmore issue price plummets by £200 million
Top fund manager Gartmore was today forced to slash the value of its planned stock market flotation by as much as £200 million after a disappointing response to the share offer from potential investors.
Market sources said that the float which had originally been planned to value the firm at up to £874 million could now see it come to market at a valuation of just £676 million.
Traders said that the original price range of 250p to 330p a share set just 12 days ago had now been slashed to 220p to 250p a share.
That has forced Gartmore's bankers to restructure the flotation radically so that far fewer shares will be sold by management and private equity owner Hellman & Friedman.
They had been expected to sell some £120million worth of shares but now look more likely to achieve only half that amount.
Previously staff were in line to share a windfall of around £70 million but that is now likely to be nearer only £30million.
It also means that more new shares will be have to be issued through the flotation to hit the £280 million target of new cash being raised to pay off debt.
Even after today's price cut traders were wary about whether the float would succeed. "The quality of the deal was pretty poor and I think even with this new range it is still too expensive," said one.
