IPO apathy scuppers Leapfrog float

THE poor appetite for new listings has been highlighted after upmarket children's nurseries group Leapfrog abandoned its £80m flotation amid a lack of investor interest. Leapfrog's decision to pull its planned flotation, just days before it was due to price the offer, came after fund managers, spooked by the experience of Punch and HMV, refused to pay the suggested asking price.

Founder chairman Derek Mapp, who also set up the Tom Cobleigh pubs group, was planning with his venture capitalist backers to float the company on the main market in a deal that would have seen him and his management team come out owning £4m of shares.

Venture capitalist EAC had hoped to exit some of its original investment in the group, which raised £10.5m in debt and equity in December. Four-year-old Leapfrog, which operates 34 children's day nurseries in the UK, was hoping to raise £30m from the offer.

The news comes after product testing group Intertek was forced to price its float at the bottom of its indicative range. The nervous IPO market will take some comfort from Intertek's ability to avoid delaying its listing, which will raise £245m for the company to value it at £580m.

Intertek's 400p issue price compares with the indicative price range of 400p to 490p set just a fortnight ago. But the disappointing market debut by music group HMV and the sharply discounted float of Punch Taverns has since quashed hopes of an imminent recovery in the demand for new listings.

The issue, two times oversubscribed, will see venture capitalist Charterhouse Development Capital cut its stake from 84% to 30%. Management, which completed the buyout from Inchcape for £380m in 1996, will have its holding reduced to 7%, including the 2.4% held by chief executive Richard Nelson. He said: 'I'm not unduly disappointed by the price. The important thing was to float and get the stronger balance sheet. Everyone was keen to price it so its goes up rather than down when trading starts.'

The 400p price represents a forward earnings multiple of 15 times based on analysts' forecasts of a £40m after-tax profit this year.