Invesco misses £46m of gains in AJ Bell IPO

UK equities team says surging share price was encouraging


Invesco has said that it considers the market response to the AJ Bell initial public offering encouraging despite the fact surging shares meant the fund house missed out on gains of £45.6m.

The investment platform’s largest shareholder sold 76 million shares in the IPO priced at 160p, which quickly surged to 220p on the first day of conditional dealing. The £45.6m worth of shares represented 42% of its existing stake in AJ Bell reducing its shareholding to 25.5%, the same as founder Andy Bell, who had previously held 28.3% of shares.

An investment manager that Portfolio Adviser spoke to said there would likely be “red faces” at the investment bank advising AJ Bell for setting the price of the IPO too low. However, they added that pricing an IPO in recent volatile markets could have been tricky.

Portfolio Adviser has sought comment from Numis Securities, which was the sponsor, financial adviser, sole bookrunner and broker for the listing, and is currently awaiting a response.

Invesco considers market response encouraging

However, Chelsea Financial Services managing director Darius McDermott said Invesco still made good money from shares sold at 160p. The US asset management giant has held AJ Bell since 2007.

Invesco had valued the company at £494m ahead of the IPO resulting in an uplift of 31.8% on shares sold at 160p, a boon for the handful of funds that hold the stock, including Mark Barnett’s £3.6bn Invesco Income fund and £882.37m Perpetual Income and Growth investment trust.

“If you want people to buy your shares, when you price your IPO you can’t be too greedy,” McDermott said. “The 160p pricing was a reasonable price to entice new investors to buy stock from existing investors.”

He bought into the IPO but said his application got scaled back by more than 50%. “There’s obviously been strong demand.”

However, he pointed out that unconditional trading commences on Wednesday, which may take away some support for the share price as retail investors are able to sell shares. “As and when people can start selling you might see that supply/demand drift a little,” he said.

Invesco did not wish to comment on the pricing of shares. However, its UK equities team said in a statement that the market’s positive response to the IPO was encouraging. “We remain both a substantial and committed shareholder on behalf of our clients and are excited to continue to support the company in its next stage of growth.”

The team said it supported the IPO and facilitated the free float.

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