Fashion chain New Look pulls plug on market plans

Feb 13 2010 by Peter McCusker, The Journal

HIGH-STREET fashion chain New Look has shelved plans for a stock market flotation in the wake of recent financial turmoil.

The decision marks the second time in two years that New Look’s owners have scrapped an initial public offering (IPO) for the retailer.

It is also the latest in a series of market listings to be put on hold this week amid uncertainty for equities.

The private equity owner of Alton Towers and Madame Tussauds firm Merlin Entertainments was revealed to have put the leisure group’s stock market debut on ice, just a day after the same company halted an IPO for US travel business Travelport.

New Look, which is owned by buy-out firms Permira and Apax Partners, stressed that yesterday’s move will not see it bin flotation plans altogether.

Carl McPhail, chief executive of New Look, said: “We have taken the difficult decision to postpone the IPO as a result of the considerable volatility in the equity markets.

“We remain convinced of the strengths of the New Look business and its suitability as a public company. We will re-evaluate our options when market conditions improve.” New Look has 1,010 stores, including 601 in the UK, and rang up sales of more than £1.3bn in its most recent financial year.

The group was hoping to raise around £650m in the stock market listing to pay down debt and position it for further growth. But its plans have been thrown off course by heightened volatility on markets in recent weeks, sparked by fears over debt levels in Greece and other embattled European countries.

The recent eurozone woes compounded a shares sell-off seen after America announced plans to tax banks and limit their activities.

London’s FTSE 100 Index has recently slumped to lows not seen for three-and- a-half months and America’s benchmark index closed below the 10,000 mark at one stage.

It is also believed investor concerns are behind the spate of IPO cancellations.

There is said to be a reluctance among overseas institutional investors to put money into UK shares generally, given unease over the value of sterling.

More specifically to New Look, investors are thought to have been worried it was trying to list at too high a price and with too much debt.