US group to keep foot in pub door

THE main shareholder in Punch Taverns, Britain's second-largest pub company, will keep its entire stake after Punch floats on the London Stock Exchange next month.

American venture capital firm Texas Pacific Group has backed Punch to the tune of £500m since 1999, but was expected to realise its investment through a flotation. However, insiders involved in the stock market launch said Texas would keep its 30% holding because 'it thinks it's a better bet than anything else'.

The move means that there will be fewer shares for institutional investors. This could raise the price they have to pay for a slice of Punch, which is expected to be valued at about £2bn.

But the decision could also be a sign that it believes the shares will be priced lower than it wanted. Texas may reduce its stake later when the shares have reached a more favourable price for an exit.

Punch executive chairman Giles Thorley will this week take to the road to sell the float to institutional investors in Britain, on the Continent and in the US.

The flotation of Punch, which owns 4,200 pubs, is expected to be the biggest of the year so far and is being seen as a sign that life is returning to the new issues market.