Game Digital, the videogame seller, has priced its flotation at a lower range in the latest sign of investor fatigue on initial public offerings (IPOs).
The company, which was rescued from bankruptcy two years ago, will sell shares at 200p a share, valuing it at £340m. On Thursday, Game Digital proposed a range of 200p to 2012p to investors as it priced the flotation.
This year has been one of the busiest ever for the IPO market after a long period in the doldrums, with investors nvestors have bought new shares in search of companies with good growth prospects as the economy recovers.
But after a feverish start to the year, fund managers are becoming more wary after a series of newly listed companies' shares dropped below their offer prices. Some investors have complained that high valuations have left little incentive to take the risk of buying before the stock starts trading.
Pets at Home, AO World and Card Factory have all slipped below their offer prices. Fat Face, the casual wear retailer, scrapped its flotation last month and Saga, the over-50s travel and insurance business, had to cut its offer price.
Game expects to raise about £121m from selling 35.5% of the company with £101m going to its owner, US hedge fund Elliott Advisors, and Game's management.
Martyn Gibbs, Game's chief executive, said: "Game Digital is a profitable and cash generative business with a great team, strong supplier partnerships and exciting digital growth opportunities. These fundamentals have enabled us to attract high quality investors who we welcome into our business."
The IPO returns Game to the stock market just two years after high debts and poor trading made it go bust in one of the high street's most visible post-crisis collapses.
The company, then called Game Group, was bought out of administration in April 2012 by OpCapita, an investment firm working for Elliott Advisors. Investors' stakes were wiped out, making fund managers wary of investing again so soon after.
After the administrator closed 277 of Game's 610 stores, OpCapita set about cutting more costs, building better links with suppliers and revamping the service to suit the needs of its young consumers.
The company now has 560 stores in the UK and Spain. In the year to 25 January it took £47m of earnings before interest, tax and other costs from revenue of £816m.
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