Synstar's market capitalisation plunged nearly 20 per cent prior to its official listing on the UK Stock Exchange last week.
Shares in the company were initially placed at 165p on 26 February by investment institution Morgan Stanley, valuing the services provider at about #270 million. However, by 5 March - the commencement of unconditional dealings - stockbroker valuations had slipped to 137p, devaluing Synstar by about #50 million.
Industry analyst Richard Holway said: 'There are two important reasons why the share price has been affected so badly. First, the placing was marketed very badly and second, the company was overpriced from the start. We would have liked to have seen Synstar initially valued at about #200 million.'
He told PC Dealer that Richard Ferre, group managing director of Synstar, was likely to be 'extremely frustrated by the whole way the placing has been handled'. Ferre was unavailable for comment.
As revealed in PC Dealer (24 February), about 87.1 million shares in the company were offered to institutional investors as part of the float.
According to a company statement, the placing raised an estimated #144 million. Proceeds are to be used by Synstar to repay #84 million of debt arising from a September 1997 management buyout.
Shares have been listed on the UK Stock Exchange under the symbol SYN.
Meanwhile, Axon, which was scheduled to list this week, appeared to have avoided similar problems. Its initial placing price was 175p, valuing the company at #85.4 million.
Holway described the Axon price as fair and said it was likely to exact a premium for investors. A representative of Axon claimed the offer was more than nine times oversubscribed.
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