City talks down Virgin Mobile float

SIR Richard Branson's latest venture into the stock market could have a jittery start this month as City gamblers bet on a weak reception for shares in Virgin Mobile.

The phones operator said last week it hoped to issue its shares at between 235p and 285p, valuing the group at £588m to £713m. The float price will be set on 20 July.

The mid-point in the range would value the company at 260p a share, or £650m, well below the original flotation target value of £1bn.

But the grey market in the shares - measured by bets taken among the City's betting shops and brokers - shows that the City has been lowering its estimates of the opening price.

When City bookmaker IG Index opened gambling on the eventual issue price on Wednesday, betting began at 253p - 7p below the mid-price suggested by Virgin. As gamblers bet the price would be lower, by Friday, IG had cut its mid-price to 250p. This would value Virgin Mobile at £625m.

The apparent weakness reflects unease about the value of Virgin Mobile and general nervousness in the stock market.

Branson's company was launched in 1999 and has 4.1m customers. The flotation marks his first venture into the stock market since 1986 when he issued shares in Virgin. He bought back the shares two years later and has since steered clear of the stock market.

GERMAN phone group T-Mobile, Virgin's former partner-appears to have pulled off a coup. In a deal agreed in January to settle a dispute with Virgin, T-Mobile stood to gain about £20m based on the present grey market price.

But the deal has been changed recently and T-Mobile has agreed to take a flat £50m, plus early repayment of a £40m loan.