Fashion retailer New Look’s board will decide today whether to proceed with an IPO as fears rise that a flotation may be impossible.
In the last few days two floats have been abandoned and investors have made it clear they harbour grave doubts about buying into private equity-backed companies coming to market.
New Look, which is scheduled to publish its prospectus on Monday, hopes to raise £650m through its IPO to clear debt. However, it is understood that potential investors have given the retailer a cool reception. Some worry that New Look has limited opportunities to grow further in the UK and that its international expansion story is unproven.
New Look’s board meets following private equity firm Blackstone’s decision to put its proposed IPO of Merlin Entertainments Group on hold and the pulling of the Travelport flotation.
City investors have expressed scepticism about private equity-backed firms following disappointments such as Debenhams’ flotation. Andy Brough, manager of Schroders FTSE 250 fund, told The Times: “Personally, I just wouldn’t buy anything off private equity – they’ve had their chance.
“What does private equity do? They arbitrage the ignorance of fund managers. Well, we’ve kind of woken up.”