No fanfare for Punch pubs float

INVESTORS are set to give Punch Taverns a cool reception when the UK's second-biggest pub company joins the stock market on Thursday. Its advisers will try to build interest in the shares over the next few days, but they seem likely to be priced at the bottom end of the 250p-to-300p range set by the company.

A shaky stock market debut by HMV Group last week and City concerns over Punch's growth potential mean it will be valued at closer to £620m than the hoped-for price of £744m.

Ahead of the float, Punch shares are being offered only to institutional investors, who are thought to have demanded a big discount to the stock market rating of the UK's biggest pubs group, Enterprise Inns. The 4,252-strong Punch chain, headed by Giles Thorley, hopes to raise up to £250m from the float to pay off some debt and fund future acquisitions.

But a leading fund manager said: 'There doesn't seem to be much enthusiasm for Punch among the institutions. People are unsure where the business will go once it is floated, because most of the big deals already seem to have been done by Enterprise Inns.'

Another said HMV's poor debut had cast a pall over the new-issue market that would affect Punch. HMV Group floated on Thursday last week at 192p a share, the bottom end of the forecast range, and it closed the week at 177p.

'The HMV float showed that the market is still pretty tender,' said an institutional investor. 'There's not a lot of depth in it. Circumstances are far from ideal for a flotation.'