News Column

Mota-Engil Africa Pulls IPO After Market Dive, ClearStar Untraded

July 11, 2014

Steve McGrath

LONDON (Alliance News) - ClearStar Inc was untraded Friday morning after its initial public offering on the AIM market, while Mota-Engil Africa NV became the fourth company so far in 2014 to blame adverse market conditions for pulling an IPO, specifically blaming the market volatility of the last 48 hours.

There have been growing signs of investor fatigue in the market for new listing in recent weeks, after a buoyant start to the year.

Retailer Fat Face, student accommodation provider Liberty Living, and offshore drilling contractor Shelf Drilling Ltd, all citing challenging market conditions for pulling their planned main market IPOs. Hotel chain easyHotel, part of the easyGroup, only ended up raising half of the GBP60 million it had originally targeted in its AIM IPO, while travel food provider SSP Group reduced the size of its planned listing on the main market to ensure it got off to a good start earlier this week.

Mota-Engil Africa specifically blamed the performance of equity markets in the last 48 hours, saying the fall in the market had hit the scale of orders for its shares in the planned IPO.

It had been due to list Friday, having priced its IPO at between 920 pence and 1,160 pence, which would have given it an initial market capitalisation of up to GBP1.3 billion.

Equity markets fell sharply in Europe and the US Thursday after concerns were raised about the financial stability of Portugal's largest-listed bank, raising fears that the fragile European banking system could again be under threat. However, markets in Europe are higher Friday with some analysts saying Thursday's sell-off was overdone.

Mota-Engil said it remains committed to listing eventually.

"Despite a book of high quality institutional orders within the announced price range, the aggregate demand was such that a successful listing and aftermarket could not be assured. The company met with investors in Europe, the UK, US and Africa over the last two weeks, achieving a high conversion of those meetings into orders, reflecting the quality and future of the African business," it said in its statement.

It had wanted to raise money to expand its engineering and construction activities in sub-Saharan Africa, and to diversify its operations and increase the orders it gets from private customers.

The company helps build everything from roads and bridges to ports, water treatment plants and real estate. It currently operates in Angola, Malawi, Mozambique, Cape Verde, Ghana, SÃo TomÉ and PrÍncipe, South Africa, Uganda, Zambia and Zimbabwe.

Meanwhile, Clearstar, which provides technology and services to the background check industry, hadn't traded several hours after first listing on the AIM market.

It raised GBP8.8 million by placing 15.5 million new shares ay 57 pence each, money it will use for marketing, funding research and development, and building out its international network.

It has a total of 36.3 million shares in issue, giving it an initial market capitalisation of GBP20.7 million at the IPO price.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: Alliance News

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