With a shadow hanging over internet stocks both sides of the Atlantic, two net IPOs in London Friday suffered very different, and some might say contradictory, fates. The eXchange Holdings Plc, an online financial services group with an eight-year trading history, ended the day just 4.5% above its placing price of 2 pounds ($3.20), while non-trading investment startup Netvest.com Plc, which had opened at 25 pence (37 cents), closed more than 100% higher at 52 pence (82 cents).
London Stock Exchange trading in Woking, UK-based eXchange got off to a rocky start, with many investors forced to wait more than an hour after the market opened to discover how many shares they had been issued. Apparently confusion over the initial placing price meant complaints to broker, SBC Warburg came thick and fast before trading got underway at 9.30am. After initially rising as high as 2.52 pounds, the share price fell to close at 2.09 pounds, valuing the company at around 425m pounds ($686m) and raising 77.6m pounds ($125.3m) for the company.
On the LSE’s Alternative Investment Market, the listing of Netvest went more smoothly. The company’s ambitious plan is to beat bigger venture capital players to potentially hot start-ups by offering smaller seed corn investments to companies with a prototype product. The firm raised around 730,000 pounds ($1.2m) in the offering, which it will use to pay its contracted consultants and invest in its target companies. It also issued one warrant for every two shares purchased. The warrants, to buy one share at 0.38 pounds, can be demanded by Netvest when its shares have been worth over 0.57 pounds for 20 working days. This will allow the firm to raise an additional 862,000 pounds ($1.4m) for investment purposes. A spokesperson told ComputerWire that Netvest will generally take minority stakes between 50,000 and 500,000 pounds ($80,000 to $800,000) in start-ups in the UK and Europe.
Netvest has no offices, no staff, and has not revealed its investment targets for the future. It says it intends to invest in a range of companies whose business models are geared, to a significant extent, to the internet. However, it adds: it is not the company’s intention to invest in companies which, in the board’s opinion, use the term ‘internet’ to create a specious artificial glamour. This is somewhat ironic, given that Netvest.com does not own, has never owned and does not intend to buy the netvest.com domain name.
