Woodford on the sidelines as AJ Bell shares surge on IPO

Questions raised about 160p pricing as shares rally more than a third

Mark Barnett and Seneca Investment Management are among the winners from AJ Bell’s successful commencement of dealing as the investment platform lists on the London Stock Exchange, while former investor Woodford has missed out on gains from the IPO.

AJ Bell shares were priced at 160p in Friday’s listing, resulting in a market cap of £651m, but by mid-morning the company had rallied 34% pushing the company close to £900m.

Chief executive and founder Andy Bell (pictured left) rang the opening bell at the London Stock Exchange on Friday morning, joined by chief financial officer Michael Summersgill (pictured right).

Surging shares raise questions over pricing

One investment manager Portfolio Adviser spoke with questioned why AJ Bell hadn’t been advised to set its price closer to 220p. “That left a lot of money on the table for whoever punted on the stock at the open.” Numis Securities was the sponsor, financial adviser, sole bookrunner and broker.

When the pricing was announced, Nextwealth managing director Heather Hopkins said she would have expected a higher price range in light of Hargreaves Lansdown and Transact share prices.

In a statement announcing the offer price, Bell said demand from blue-chip institutions and the platform’s own customers was an endorsement of the business and the market opportunities ahead. “The IPO is a significant milestone for the business and I see it as firing the starting gun on our next phase of growth, which I’m massively excited about leading the business through.”

Woodford misses the rally

Woodford Investment Management used to be the platform’s third largest shareholder with an 8% stake but sold his stake to Invesco and AJ Bell management in February. It was reportedly worth £40m at the time.

In contrast, Seneca fund manager Richard Parfect said they were delighted that the AJ Bell IPO was delivering “material benefit” to their investors and said the listing should further raise the profile of the platform. The boutique manager, which holds a 3% stake, looked forward to remaining a part of the platform’s growth, Parfect said.

Invesco’s stake increased to 44.2% as a result of Woodford’s exit while management’s stake went to 25%. Bell held the remaining 28.3%. Immediately following admission, Invesco’s and Bell’s stakes reduced to 25.5%.

Woodford’s disposal of AJ Bell shares from his flagship Equity Income fund came when the manager was reaching the Ucits 10% hard limit on owning unquoted securities, which is enforced by the Financial Conduct Authority. The percentage in the open-ended fund hit 9.69% at the end of January.

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

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