Nick Goodway: London is facing IPO indigestion

London is in danger of suffering a serious bout of IPO indigestion.

So far, just two trading weeks into the year, intentions to float totalling the thick end of £5 billion have popped up on the stock market news system.

Last week we had housebuilder Countryside (up to £1 billion), spread better CMC (£800 millionish) and Ascential, the publisher formerly known as Emap (£800 million). Yesterday even a cut-price sale of Clydesdale Bank shares could value it at up to £2 billion while rival Metro Bank is muttering about a £1.7 billion valuation. PureGym is also limbering up for a £500 million float.

With such a variety of delights in the shop window, the old adage “caveat emptor” has never been truer.

First up, given that the stock market has fallen 7% this year, are those mooted valuations at least 7% lower than the level at which they were being touted about at the end of last year?

Then, how badly do the sellers want to cash in or get rid of the businesses they are selling?

National Australia Bank may have been trying to flog Clydesdale for the past two decades but it is determined to get rid of it this time around.

Peter Cruddas has looked at selling a big stake in his CMC at least three times, and has baulked twice because the market wasn’t prepared to pay enough. The other three are all private equity-owned so are under some pressure to sell or flip their investments to ensure their internal rate of return remains healthy.

None of these are fundamentally unsound businesses. Indeed compared with some recent flotations, most of them have a decent trading record stretching back many years.