HMV hits flat note ahead of float

SHARES in HMV are going for a song. City bookmakers were speculating on Wednesday night that the equities could be about as popular as the last album by Mariah Carey - another great flop for HMV's biggest shareholder EMI.

Financial Spreads was quoting a grey market price range of 194p to 199p, while Cantor Index was quoting 198p to 208p, at the bottom of the company's 190p to 220p indicated range. There were rumours that the issue price, due to be announced today for the Waterstone's bookshops to HMV record stores group, could be as low as 192p.

At this price, the float would raise £351m of new money. After fees, it would be about £325m, valuing the company at £780m, a far cry from the original hoped-for price tag of around £1bn.

EMI, with 43%, and US venture capital group Advent, with just over 40%, are selling some shares. Money raised by HMV will be used to cut debts and fund store expansion.

Disappointment over the HMV offer could give the jitters to a rush of flotations following behind it. Still to come is Punch Taverns, which unlike HMV has spurned the retail market, perhaps because it does not want the hassle when investor confidence is brittle. Other household names in the flotation pipeline include GUS's upmarket fashion house Burberry, directories business Yell, Rank Hovis, Homebase, William Hill and Focus DIY.