View from City Road: Failures with a lot in common

Things must be bad in the new issues market. Stephen Roper, chief executive of Churchill, the long- established china company, complained yesterday that the market is in such 'bad odour' that he has had to drop his offer price by 15 per cent and halve the amount he is raising.

To hammer home the point, he lists a series of recent new issue flops - Aerostructures Hamble, Nottingham Group, MDIS, Roxboro and Hozelock. These names have more in common than being part of the new issues debacle. They were all also management buyouts brought to the market by venture capitalists keen to cash in their investment.

A pattern of greed and expediency seems to be developing over the flotation of many former buyouts. Venture capitalists, obliged to shelter their investments through the recession, seized the opportunity of a booming market earlier this year to unload whatever businesses they could. In the process, they were able to dress their companies well and ratchet ratings sky-high. Managements were equally keen to cash in. But once on the market they found it hard to match inflated expectations.

It is hard to disagree with Mr Roper that it is mainly the greed of the buyouts that is responsible for fouling the new issues market. His experience is not unique. One institutional investor, looking at his diary, claims he was due to see 25 companies in the next few weeks, all wanting new funds. And their chances of securing it? They will have to have a very good case.